Lim Beng Kiat v Mohammad Sarman bin Saidi

• Jurisdiction: Singapore
• Judge: Chan Seng Onn J
• Judgment Date: 19 November 2020
• Neutral Citation: [2020] SGHC 253
• Court: High Court (Singapore)
• Docket Number: District Court Appeal No 38 of 2019
• Year: 2020
• Published date: 24 November 2020
• Hearing Date: 30 September 2020,17 September 2020
• Plaintiff Counsel: Ashok Kumar Rai (Cairnhill Law LLC)
• Defendant Counsel: Kanagavijayan Nadarajan (Kana & Co)
• Subject Matter: Contract,Formation,Trusts,Resulting Trusts,Equity,Remedies,Substitutive compensation
• Citation: [2020] SGHC 253

Chan Seng Onn J: Introduction

The present appeal arises against the decision of the District Judge (“DJ”) in District Court Suit No 2228 of 2015 (the “Suit”). The DJ’s grounds of decision may be found in Lim Beng Kiat v Mohammad Sarman bin Saidi [2020] SGDC 46 (the “GD”). As the facts of the case have been thoroughly set out in the GD, I will reiterate only the facts pertinent to the present appeal.

The appellant, Lim Beng Kiat, was a director of Kim Hup Chor Construction Pte Ltd (the “Company”). He is the plaintiff in the Suit. The respondent, Mohammad Sarman bin Saidi, is the defendant in the Suit. The respondent joined the Company as an employee in February 2007. His employment with the Company concluded on 18 May 2015.

The appellant brought two claims against the respondent in the Suit: the first is for the sum of $8,647 (the “Monies”); the second is for a second-hand car bearing licence registration number SKH1791X (the “Car”).

As regards the Monies, the parties’ cases at trial are as follows. The appellant’s case at trial is that he had advanced personal loans to the respondent by way of making payments to various licensed moneylenders on the respondent’s behalf.¹ According to the appellant, these payments were made pursuant to an “understanding of the parties” that the respondent would repay the loans to him upon demand.² However, the respondent never repaid the Monies, even after his employment with the Company concluded. The appellant accordingly claimed for the Monies, as well as interest on the same from the date of the Writ of Summons until the date that the Monies are returned to him.³ The respondent denies that it was the understanding between him and the appellant that the Monies would be repaid upon demand. His case is that he approached the appellant in or about November 2010, requesting the appellant to pay for his loans on “a goodwill basis”. The respondent cited his contributions towards the large profits made by the Company in 2010, and on this basis requested the appellant’s help.⁴ According to the respondent, the appellant agreed to this request.

In respect of the Car, the parties’ cases are as follows. The appellant’s case at trial is that he provided the respondent the Car “for use in connection with the discharge of [the respondent’s] duties as an employee of the Company”.⁵ The respondent had entered into a hire purchase agreement for the purchase of the Car (the “HPA”). The appellant stood as guarantor under the HPA, and paid for the “deposit, transfer fee, road tax, insurance, and all hire purchase rentals” under the HPA.⁶ When the respondent left the Company, he did not return the Car despite there being, according to the appellant, an “understanding” that the Car would be returned to him upon cessation of the respondent’s employment.⁷ As relief, the appellant sought delivery up of the Car and transfer of title to the Car to him. Alternatively, he sought the sums of $77,420.00 (being the total hire purchase price of the Car) and $4,527.00 (being the transfer fee), all insurance and road tax charges for the Car. He also claimed interest. These were his prayers as per the Statement of Claim (Amendment No 2). Subsequently (ie, after the trial and in the course of this appeal), the appellant amended his prayers for relief in the Statement of Claim (Amendment No 3) –⁸ I will address these changes and their significance shortly (see [8] below). The respondent argues that the appellant volunteered to be guarantor under the HPA. He avers that the Car was meant to be a gift to him from the Company “in consideration of [his] birthday which fell on 31st January 2013”.⁹ Pursuant to this gift, the Company agreed to make the relevant payments under the HPA, including the initial deposit, transfer fee, road tax, insurance, and all hire purchase payments. This was contingent on the respondent remaining in the employ of the Company. The respondent denies that the appellant made the aforementioned payments under the HPA – even if the appellant did so, such payments were made “on behalf of the [Company]”.¹⁰

The decision below

The DJ dismissed both of the appellant’s claims. The DJ found that there was no agreement between the appellant and the respondent for the latter to return the former the Monies. The Monies were not loans advanced by the appellant to the respondent that were payable on demand.¹¹ There is no evidence of the existence of such loans. The DJ found that the presumption of resulting trust arose over the Car in favour of the appellant, because the appellant provided the purchase monies under the HPA, and that this presumption was not rebutted.¹² However, the DJ did not award the appellant any remedy, due to the absence of evidence that the proceeds from the sale of the Car still existed. The DJ regarded this as a problem with the process of tracing the proceeds of sale.¹³ The DJ also saw no basis to impose a remedial constructive trust.¹⁴ The DJ hence dismissed the claim for the Car.¹⁵

The appellant appeals against both aspects of the DJ’s decision.¹⁶ The Notice of Appeal was filed on 11 December 2019. By and large, and unless otherwise indicated, the parties’ positions on appeal mirror their respective cases at trial. Neither side has sought to introduce any new evidence on appeal.

For completeness, I also note that in HC/SUM 1595/2020, which was heard on 16 June 2020, I allowed the appellant’s application to amend the Statement of Claim (Amendment No 2).¹⁷ The key amendments in this regard concerned the reliefs sought. The amended prayers for relief are, in material part, as follows.¹⁸

…

a. A declaration that the Defendant holds the [Car] on trust for the Plaintiff or, alternatively, for the Plaintiff and the Defendant in such shares as the Court shall determine; b. If the Plaintiff is not found to hold the entire beneficial interest in the [Car], then a declaration that the Plaintiff is entitled to the remedy of equitable accounting to recover the amounts paid by the Plaintiff towards the [Car] in excess of the amount paid by the Plaintiff representing his beneficial interest in the [Car]; c. A monetary award for the value of the [Car] to be assessed and to be paid by the Defendant to the Plaintiff on the grounds that the Defendant had disposed of the [Car] in breach of his fiduciary duties and/or in breach of the trust and/or the ground that the Defendant had not returned the Vehicle despite the Plaintiff’s letter of demand dated 30 June 2015. d. In the alternative to (c) above, an order that the Defendant is to account to the Plaintiff for the sums received from the sale of the [Car] and an order that the Defendant is to pay all such sums found to be due from the Defendant to the Plaintiff upon the taking of the said account on the ground of the Defendant’s breach of fiduciary duties and/or breach of trust and/or that it would be unconscionable for the Defendant to retain the proceeds of the sale of the [Car] …

Having considered the parties’ arguments, I allow the appeal in part, specifically as regards the Car, and enter interlocutory judgment in favour of the appellant in this respect. I dismiss the part of the appeal concerning the Monies.

Salient facts pertaining to the Monies and the Car

Apart from the background to the case as delineated above, I highlight a few further salient facts that, in my view, are relevant to the present appeal.

The parties agree that the appellant provided the Monies totalling $8,647, which were used to repay various licensed moneylenders on the respondent’s behalf. The Monies were provided in eight separate tranches and paid out between 19 November 2010 and 20 November 2010. These payments have been tabulated accurately in [6] of the GD, and the parties do not dispute that such payments were made. I briefly summarise the payments as follows: three payments were made on 19 November 2010, amounting to a total of $4,150; and five payments were made on 20 November 2010, amounting to a total of $4,497.

The parties also do not dispute that the appellant had paid a total of at least $65,552 towards the purchase price of the Car. This was paid out in the form of:¹⁹ a cash deposit amounting to $24,000;²⁰ and 28 monthly instalments of $1,484 between 7 February 2013 and 18 May 2015, amounting to a total of $41,552.²¹

The remaining payments relating to the car, amounting to $11,868 in total, were paid by the respondent. He made these payments after 18 May 2015, ie, after the conclusion of his employment with the Company. The Car remained in the respondent’s exclusive possession until he eventually sold it.²²

Issues

The three main issues are as follows: whether there was a loan agreement between the appellant and the respondent as regards the Monies; whether a resulting trust in favour of the appellant arose over the Car; and what the appropriate remedy is with respect to the Car.

I address the issues in the aforementioned order. To the extent that other issues have been identified by the parties, these are subsumed under the issues listed above.

My decision on the Monies

The DJ correctly held that the burden is on the appellant to prove that an agreement existed between him and the respondent for the latter to return him the Monies on demand.²³ It is the appellant who alleges this fact.

This issue is relatively straightforward and is to be resolved in favour of the respondent. I see no reason to overturn the DJ’s findings in this respect, ie, that there was no agreement between the appellant and the respondent for the latter to return the former the Monies (see [6(a)] above). There is simply no evidence supporting the appellant’s case.

First, the appellant does not allege the existence of any written loan agreement. Indeed, there is no evidence of such a documented agreement in the record. His case is therefore that there was...