Lim Ah Leh v Heng Fock Lin

• Jurisdiction: Singapore
• Judge: Vinodh Coomaraswamy J
• Judgment Date: 18 July 2018
• Neutral Citation: [2018] SGHC 156
• Court: High Court (Singapore)
• Hearing Date: 23 January 2017,11 August 2016,01 December 2016,26 July 2016,29 May 2017,27 July 2016,23 December 2016,05 August 2016,03 August 2016,02 August 2016,08 August 2016,10 August 2016,04 August 2016
• Docket Number: Suit No 449 of 2014
• Plaintiff Counsel: Tan Sia Khoon Kelvin David and Sara Ng Qian Hui (Vicki Heng Law Corporation)
• Defendant Counsel: Yeo Choon Hsien Leslie and Shriveena Naidu (Sterling Law Corporation)
• Subject Matter: Trusts,Resulting trust,Presumed resulting trusts,Equity,Fiduciary relationships,When arising,Duties,Limitation of actions,Particular causes of action,Account,Equity and limitation of actions
• Published date: 17 April 2019

Vinodh Coomaraswamy J: Introduction

From 1993 to 2007, the plaintiff paid various sums of money in different currencies to the defendant for her to manage and invest on his behalf. He paid the money to the defendant either himself or through family members and either in the form of traveller’s cheques purchased in New Zealand or as cash. The total sum of money paid in this way is about S$3.5m at today’s exchange rates. In 2014, the plaintiff commenced this action seeking an order that the defendant account to him for all of that money.

The plaintiff is a citizen of New Zealand and carries on business there. The defendant is a citizen of Singapore and carries on business here. The defendant and the plaintiff are in-laws: the plaintiff’s wife is the defendant’s sister. Sadly, this suit has caused a permanent rift between the defendant and five of her seven siblings – including the plaintiff’s wife – most of whom gave evidence for the plaintiff at trial.¹

The plaintiff’s case in this action is simple: (i) the defendant became the trustee of all of the money which she received from him; (ii) she therefore owes him a number of fiduciary duties, including a duty to account for how she managed and invested the money; and (iii) she is in breach of those fiduciary duties.

The plaintiff’s claim rests on events which took place as long ago as 1993. The oral evidence before me is stale and the documentary evidence is limited. The passage of time also raises interesting questions at the intersection of the law of limitation and the law of trusts. Those questions have ultimately proved to be determinative of this action.

I have found that the plaintiff’s action for an account is time-barred by s 6(2) of the Limitation Act (Cap 163, 1996 Rev Ed) (“Limitation Act”). In any event, I would have exercised my discretion not to grant an order for an account. The plaintiff has appealed against my decision. I therefore now set out my reasons.

Summary of my findings

The following is a summary of my findings. The defendant did receive substantially all of the sums of money which the plaintiff claims to have paid to her. It is common ground that the plaintiff did not intend to make a gift of these sums to the defendant. She therefore held each sum, as and when received, on a presumed resulting trust for the plaintiff. That does not mean, in itself, that the defendant owed the plaintiff any fiduciary duties. But she did owe the plaintiff at least a duty to account and a duty not to place herself in a position of conflict between her personal interests and the plaintiff’s interests.

The plaintiff’s claim, however, is time-barred. The plaintiff commenced this action on 28 April 2014. It is common ground that the plaintiff last paid a sum of money to the defendant in 2007. Section 6(2) of the Limitation Act bars a claim for an account in so far as the plaintiff seeks to go back more than six years before the action was commenced. That section applies to an action for an account arising from a resulting trust as it does in the case of one arising from an express trust.

None of the exceptions to s 6(2) created by s 22(1) of the Limitation Act apply. First, the defendant, although in breach of her duty to account, is not in fraudulent breach of that duty. Second, the defendant did not breach her duty not to place herself in a position of conflict between her own interests and those of the plaintiff. Finally, the plaintiff has failed to prove that any of the trust property remains in the defendant’s possession or has been converted by her to her own use.

Finally, quite apart from s 6(2) of the Limitation Act, I would have exercised my discretion not to order the defendant to render an account to the plaintiff because it would be oppressive to do so and because there is no good reason to order the defendant now to render an account going back almost a quarter century which would justify the time, cost and effort which the defendant would have to incur in preparing it. The evidence before me does not indicate that the defendant has committed a possible fraud which taking an account might uncover. Further, the plaintiff was aware at all times of how the defendant was managing and investing his money. Indeed, he took an active role in considering and approving certain investments which she made on his behalf.

Factual background The parties

The plaintiff and his wife, Mdm Heng Fock Too (also known as Elina Lim) married in or around 1990.² They live in New Zealand. From 1983 to 2011, the plaintiff managed a number of businesses in New Zealand, including a business exporting wool and sheepskin and an associated retail business in the tourism sector. Both businesses were conducted through a company incorporated in New Zealand known as The Woolbarn Ltd.

The plaintiff and his wife visited Singapore regularly.³ The plaintiff’s wife had family here and the plaintiff attended travel fairs here. During one of these visits to Singapore in the early 1990s, the plaintiff became acquainted with the defendant. At that time, he was about 50 and she was in her early thirties. She was then a young partner in a book-keeping business called Heng Management Services (“Heng Management”) which she had founded in 1988.⁴ She was also a director and a shareholder of a company incorporated in Singapore in 1992 known as Vescoplastics (SEA) Pte Ltd (“Vescoplastics”).⁵

The parties enter into an arrangement

It is not disputed that the parties soon entered into an arrangement as a result of which the plaintiff sent various sums of money from New Zealand to the defendant in Singapore. To this end, in August 1994, both parties opened a joint account in Singapore with United Overseas Bank (“UOB”) in order to hold the money. The defendant wanted to open a new account so as not to mix the plaintiff’s money with her own.⁶

The arrangement between the parties involved, at the very least, the defendant investing the plaintiff’s money and paying the proceeds to the plaintiff from time to time. The defendant made two main investments with the plaintiff’s money.

The Shanghai properties

The first main investment was to purchase an office unit in a Shanghai development. The defendant wanted to set up an office in Shanghai for Vescoplastics and decided to buy an office unit. At the same time, she told the plaintiff that this was an opportunity for him to buy an office unit in the same development. He agreed to invest in two office units. I will call the plaintiff’s two office units the “Shanghai properties”. The purchase of the Shanghai properties was completed in 1998. The defendant’s staff in Shanghai assisted in letting the Shanghai properties and collecting the rent.

The defendant sold the Shanghai properties in 2004. The proceeds of sale were, however, repatriated to Singapore only in 2008. The delay was due to the strict capital controls in place in China.

The money due to the plaintiff from the sale of the Shanghai properties was eventually paid out of China into an account in Singapore with Citibank in the joint names of the defendant and her husband. The defendant kept the plaintiff aware of this.⁷ The defendant then used the money in that account to trade in foreign exchange on the plaintiff’s behalf.

The defendant closed this Citibank account in early 2009 and transferred the balance into a new Citibank account in the joint names of the plaintiff, his wife and the defendant. The defendant continued to use the plaintiff’s money in this new Citibank account to trade in foreign exchange. In addition, she used some of the money to invest in gold and to buy shares in Citibank. She did so under the plaintiff’s directions.⁸

The Rochor property

The second main investment which the defendant made with the plaintiff’s money was in shares in a company called GK Holding Pte Ltd (“GK Holding”). The main asset of GK Holding was a commercial property in Sim Lim Square at 1 Rochor Canal Road which was let to retail shops and a food court. I shall call this the “Rochor property”.

The parties invested in shares in GK Holding in two tranches. They acquired the first tranche in 1994. At that time, a shareholder of GK Holding was offering 15% of the company for sale. The defendant told the plaintiff about this opportunity. The plaintiff agreed to buy 10% of GK Holding out of the 15% on offer. The defendant agreed to buy the remaining 5%. The defendant paid Teo Chye Har, a minority shareholder of GK Holding, for these shares. As a result of this purchase, the plaintiff became the legal owner of 15% of GK Holding. He held 10% for himself and the additional 5% for the defendant. In 1999, he transferred that 5% to the defendant.

The parties acquired their second tranche of shares in GK Holding in 2000, when the majority shareholder sold all his remaining shares. The plaintiff purchased an additional 15% of GK Holding and the defendant purchased an additional 20%. As a result, they each now held 25% of GK Holding. Teo Chye Har purchased the remaining shares on offer and increased her shareholding to 50%. The defendant and her husband then took over the day to day management of GK Holding.

At that time, the defendant was also managing a business called Yi Kang Food & Beverage (“Yi Kang”). Yi Kang’s business was running a drinks stall from a unit at the Rochor property which it had leased from GK Holding. In 2005, when Yi Kang’s business picked up, the defendant began to share a portion of its profits with the plaintiff out of goodwill. The defendant later started two other food and beverage ventures which each leased a unit at the food court in the Rochor property from GK Holding. They were known as Dessert@Sim Lim Square LLP and Sleek Espresso Bar.

In 2012, GK Holding sold the Rochor property for about S$39m. The net proceeds of sale were distributed among the shareholders pro rata. The defendant and her husband then...