Lim Geok Lin Andy v Yap Jin Meng Bryan

• Court: High Court (Singapore)
• Judge: Lai Siu Chiu SJ
• Judgment Date: 21 October 2016
• Neutral Citation: [2016] SGHC 234
• Citation: [2016] SGHC 234
• Hearing Date: 02 March 2016,03 March 2016,07 March 2016,13 June 2016,08 March 2016,11 March 2016,29 February 2016,25 April 2016,04 March 2016,01 March 2016
• Published date: 19 August 2017
• Docket Number: Suit No 1057 of 2013
• Plaintiff Counsel: Tan Kheng Ann Alvin and Os Agarwal (Wong Thomas & Leong)
• Defendant Counsel: Chin Li Yuen Marina, Liang Hanwen Calvin and Eugene Jedidiah Low Yeow Chin (Tan Kok Quan Partnership)
• Subject Matter: Contract,Oral Agreement,Variation,Res judicata,Extended doctrine

Lai Siu Chiu SJ: Introduction

This is yet another chapter in the dispute between Yap Jin Meng Bryan (“the defendant”) and his former partners in his 2008 investment in properties located at 428 and 434 River Valley Road (“the Properties”). The defendant’s two partners in that venture were Lim Koon Park (“Park”) and Lim Geok Lin Andy (“the plaintiff”).

The Properties were purchased in April 2008 for $48.5m and sold for $60.08m in 2009 using Riverwealth Pte Ltd (“Riverwealth”) as the investment vehicle. Park sued the defendant and Riverwealth in Suit No 184 of 2010 (“the 2010 Suit”) for a share of the profits made from the sale of the Properties. On 7 August 2012, this court dismissed Park’s claim and allowed the defendant’s counterclaim based on Park’s misrepresentation (see Lim Koon Park v Yap Jin Meng Bryan and others [2012] SGHC 159).

In September 2012, Park appealed against the dismissal of his claim (in Civil Appeal No 107 of 2012) and his appeal was allowed on 22 July 2013; see Lim Koon Park and another v Yap Jin Meng Bryan and another [2013] 4 SLR 150 (“the CA judgment”). The appellate court held that the defendant, Park and the plaintiff had a profit-sharing arrangement in the ratio 2:1:1 (“the Initial Agreement”) for the Properties when sold. The appellate court ordered that an inquiry be conducted to determine Park’s 25% share of the profits from the gross sale proceeds less specified deductions.

The inquiry was held by this court at the conclusion of which on 29 October 2015, the court allowed deductions amounting to $5,408,676.58 to be made from the gross sale proceeds of the Properties (see Lim Koon Park v Yap Jin Meng Bryan and others [2015] SGHC 284).

A further hearing was held by this court to determine the rate and amount of interest to be awarded to the defendant for his personal loan of $22.58m (rounded down for ease of reference) extended to Riverwealth to help fund the purchase price of the Properties. The interest due to the defendant was quantified on 3 March 2016 at $2,990,263.79 (see Lim Koon Park v Yap Jin Meng Bryan [2016] SGHC 29). That enabled this court in turn to quantify Park’s 25% share of profit as amounting to $794,569.87. Both Park and the defendant have appealed against this court’s assessment in Civil Appeals No 44 and No 51 of 2016 respectively.

In this suit, the plaintiff sought to rely on the CA judgment to contend that like Park, he is entitled to 25% share of the net profits made from the sale of the Properties. The defendant disputed his claim, contending that unlike the CA judgment’s finding in relation to Park, the Initial Agreement vis-à-vis the plaintiff had been varied. The defendant contended that the plaintiff had relinquished his 25% profit share in exchange for being released from all liabilities of Riverwealth including being a guarantor for the $30m loan (“the loan”) to Riverwealth from Hong Leong Finance Ltd (“HLF”). This agreement was termed the “Varied Agreement” by the defendant in his pleadings in the 2010 Suit and “the Varied Oral Agreement” in his pleadings in this suit.

The pleadings (i) The plaintiff’s pleaded case

It would be appropriate at this juncture to look at the pleadings. The plaintiff pleaded that the threesome (namely the defendant, Park and himself) orally made the Initial Agreement in or about September 2007. He relied on the CA judgment for his claim that the defendant must account to him for 25% of the net profits made from the sale of the Properties based on the Initial Agreement.¹

The plaintiff denied there was a Varied Oral Agreement. Even if it existed, the plaintiff contended that the transfer of all his shares in Riverwealth to the defendant had nothing to do with the profit-sharing arrangement and his entitlement to 25% share of the profits.

Over and above the terms of the Initial Agreement found by the appellate court, the plaintiff alleged for the first time² that the defendant had assured him that his profits pursuant to the Initial Agreement would not be less than $1.55m (“the Minimum Profit Assurance”) projecting a land sale of the Properties at $60m which was the minimum price at which the Properties were to be sold. The plaintiff pleaded he had no reason to doubt the defendant’s promise of payment as they had known each other since junior college days and they had carried out a property investment together. More will be said of this investment property later.

In Further and Better Particulars that he furnished pursuant to the defendant’s request, the plaintiff alleged that the Minimum Profit Assurance was made in an email dated 1 August 2008 from the defendant to Park and the plaintiff and orally after a meeting at the Uluru Restaurant on 17 December 2008 (“the Uluru meeting”). The plaintiff alleged: That under the terms of the Initial Agreement, the defendant had in or about the first quarter of 2008, agreed to bear the holding costs for the Properties for a period of at least 18 months from the date of purchase of the Properties (“the Minimum Financing Period”). The term was re-confirmed at a meeting on 9 July 2008 at Park’s office; That he had transferred his (remaining) shares in Riverwealth to the defendant over two tranches (on 30 January 2009 and 27 March 2009) pursuant to a request from the defendant in order to assist the defendant’s re-financing of the Properties with a private bank at a lower holding cost. The terms of the re-financing according to the defendant were: Riverwealth was required to be 100% owned by the defendant in order to be pledged as collateral; The loan to be extended was to be $32m secured by land held by Riverwealth and other assets provided by the defendant; Interest payable was to be cost of funds plus 1.5%. The defendant’s request in (b) was made to the plaintiff by way of an email dated 2 August 2008 and by an email to the plaintiff and Park dated 24 November 2008. The transfer of shares was not intended to affect the plaintiff’s profit share under the Initial Agreement; In the alternative, the plaintiff alleged that even if he had agreed to the Varied Oral Agreement, the defendant gave no consideration for the variation such as to enable the defendant to enforce the same against the plaintiff.

(ii) The defendant’s pleaded case

The defendant averred that with the onset of the global financial crisis (“the GFC”) in 2008, it became clear by end-August 2008 that the Properties could not be sold for the target price of $60m to $80m. The inability to sell the Properties resulted in a longer than anticipated holding period (against an original estimate of four months) with correspondingly higher costs.

The GFC peaked following the collapse of Lehman Brothers on 15 September 2008. This prompted HLF to review the loan to Riverwealth as which result a serious risk arose that HLF would withdraw the loan. HLF had raised the following issues: It valued the Properties at $48.5m as of 17 December 2008 which meant that Riverwealth was in negative equity which HLF required Riverwealth’s shareholders/directors to address and; HLF’s loan requirements (in its letter of offer dated 26 March 2008) had not been fulfilled including the placement of a fixed deposit of $1m with HLF.

The above developments placed Riverwealth at risk as, if the loan was withdrawn by HLF, it could result in all parties to the Initial Agreement losing their investment and being held personally liable as joint and several guarantors of the loan. There was therefore an urgent need to renegotiate the loan or find alternative sources of financing. On behalf of Riverwealth, the defendant negotiated with HLF which resulted in an extension of the loan without further conditions being imposed save for a $1m fixed deposit which HLF agreed could be placed in the defendant’s personal name.

The defendant averred that throughout the period until the sale of the Properties, he provided and continued to provide for Riverwealth’s holding costs for the Properties. However due to the continuing bearish property market caused by the GFC, the holding costs for the Properties continued to grow. To address the situation and to reduce his risk exposure, the defendant made a capital call to the plaintiff and to Park to either: inject capital into Riverwealth (“Option 1”) or; transfer their shares to the defendant and surrender their respective shares of profit under the Initial Agreement (“Option 2”). (The two options are henceforth referred to “the Exit Offer”). In his closing submissions, the plaintiff stated that in substance the “Varied Agreement” pleaded in the 2010 Suit, the “Varied Oral Agreement “ pleaded in this suit and the “Exit Offer” described above are the same.

Park did not accept either Option in the Exit Offer. Instead, he commenced the 2010 Suit. The plaintiff was unwilling and/or unable to inject cash into Riverwealth to meet the anticipated additional holding costs. He therefore accepted Option 2 of the Exit Offer, duly transferred all his shares in Riverwealth to the defendant by 27 March 2009, resigned his directorship by letter dated 27 March 2009 and thereafter was no longer involved in the decision making of Riverwealth.

The defendant contended that the plaintiff’s claims (which he denied) of (i) the Minimum Profit Assurance and (ii) the Minimum Financing Period were an abuse of process as they amounted to a collateral attack on the CA judgment.³ This was denied by the plaintiff. The plaintiff further pleaded that “the effect of the decision in CA 107 is that the [d]efendant was obliged to bear holdings costs for a period beyond 18 months from the date of purchase of the Properties.”⁴

Before I address the evidence that was adduced by the parties, it should be noted that the plaintiff attempted to shortcut and/or expedite his legal proceedings by applying to intervene in the 2010 Suit (vide Summons No 299 of 2014) as a defendant at...