Lim Kiat Seng v Lim Seng Kiat and Lim Boon Tiong

• Jurisdiction: Singapore
• Judge: Lim Wee Ming
• Judgment Date: 18 August 2020
• Neutral Citation: [2020] SGDC 191
• Court: District Court (Singapore)
• Docket Number: District Court Suit No 165 of 2018, District Court Appeal No 20 of 2020
• Year: 2020
• Published date: 07 January 2021
• Hearing Date: 21 November 2019,20 November 2019,10 March 2020,14 August 2019,15 June 2020
• Plaintiff Counsel: Mr Ignatius Joseph (M/s Ignatius Joseph & Associates)
• Defendant Counsel: Mr Alagappan s/o Arunasalam (M/s A Alagappan Law Corporation)
• Subject Matter: Partnership,Partnership property,Trusts,Constructive trusts,Common intention constructive trusts
• Citation: [2020] SGDC 191

District Judge Lim Wee Ming: Introduction

The plaintiff’s claim against the first and second defendants, who are his brother and nephew respectively, is for the sum of $161,314.17, being part of the proceeds of sale of a property at Everton Park (“the Property”), that was owned by the parties as joint tenants. The plaintiff claims that the second defendant should not have received any part of the sale proceeds, as had not contributed to the purchase of the Property.

I dismissed the plaintiff’s claim. The plaintiff has appealed against my decision.

Facts

The plaintiff and the first defendant are brothers. The second defendant is the son of the first defendant. The plaintiff, the first defendant and their father, Lim Kian Ann, were partners in a grocery business at the Property, known as Lim Kian Huat Mini-Supermarket (“the Partnership”).

In 1995, the Housing Development Board offered to sell the Property to Lim Kian Ann, the plaintiff and the first defendant. However, the three partners were unable to obtain a mortgage loan to purchase the Property, because of their advanced age. The second defendant who was 25 years old at that time, was then brought in. With the second defendant as a joint purchaser of the Property, a mortgage loan could be obtained. The Property was purchased by Lim Kian Ann, the plaintiff, the first defendant and the second defendant, as joint tenants for the sum of $630,000.

A mortgage loan was obtained from Keppel Bank to finance the purchase of the Property. The bank also provided an overdraft facility to the Partnership, with security on the Property.

In 1996, Lim Kian Ann withdrew from the Partnership. However, he continued to remain as a joint tenant of the Property.

In 2001, Lim Kian Ann passed away. After his death, the plaintiff, the first defendant and the second defendant remained the surviving joint tenants of the Property.

The Property was sold for the sum of $1,360,000 in September 2011. The proceeds of sale were divided equally between the plaintiff, the first defendant and the second defendant in 2012.

Unfortunately, instead of being happy with the profit that they had made, the sale of the Property gave rise to the present dispute, as the plaintiff now claims that the second defendant is not entitled to any share of the sale proceeds in the Property. The claim in the action herein was filed in January 2018, almost six years after the proceeds of sale were distributed in 2012.

The plaintiff’s claim against the defendants is for the sum of $161,314.17, which the plaintiff claims is his share in the sale proceeds of the Property, that was wrongly received by the second defendant. The plaintiff’s position is that: The Property is a partnership property purchased with partnership funds and that the second defendant held his interest in the Property on trust for the Partnership. The second defendant had no beneficial interest in the Property, as he was never a partner in the business and had not made any financial contributions to the purchase of the Property.

The second defendant’s position is that the plaintiff, Lim Kian Ann, the first defendant and the second defendant agreed that they would jointly apply for a bank loan, jointly purchase the Property as joint-tenants and each will have an equal share in the Property and equally divide the sale proceeds.¹

The first defendant takes the same position as the second defendant.² However, the first defendant did not give evidence at the trial. The first defendant’s daughter, Lim Sue Feng, was appointed as his litigation representative,³ as the first defendant was diagnosed with liver cirrhosis which caused fluctuating memory and he lacked the mental capacity to understand court proceedings.⁴

Issues

The key issues at the trial were: whether the Property was partnership property, and whether there was a common intention that the parties would have an equal share in the Property and its sale proceeds.

Whether the Property was partnership property

In relation to the plaintiff’s argument that the Property was partnership property because the Property was purchased using partnership funds, the plaintiff seeks to rely on section 21 of the Partnership Act (Cap 391, 1994 Rev Ed). Section 21 of the Partnership Act provides:

Unless the contrary intention appears, property bought with money belonging to the firm is deemed to have been bought on account of the firm.

[emphasis added]

Accordingly, under section 21 of the Partnership Act, it does not suffice to look at only whether the Property was purchased with money belonging to the Partnership. It is necessary to also ascertain whether there was any contrary intention otherwise.

The plaintiff further seeks to rely on the High Court decision of Sim Yak Song v Lim Chang (“Sim Yak Song”) [2003] 3 SLR (R) 351, in support of his argument that the Property was partnership property because it was purchased with partnership funds.⁵

The key issue in Sim Yak Song was in relation to the rights of retired partners to property which the parties agreed was partnership property. The court held that although the certificate of title of the property listed the retired partners and the remaining partners as joint tenants, the asset was held on trust for the partnership (at [10]). The court found that the retired partners did not have a right to the property after they withdrew from the partnership and that the retired partners were merely unsecured creditors of the partnership (at [12]). Accordingly, the court ordered the retired partners to sign the relevant documents transferring the property to the remaining partners.

I am of the view that Sim Yak Song is distinguishable for the following reasons: In Sim Yak Song, it was common ground that the property was...