Ling Yew Kong v Teo Vin Li Richard

• Jurisdiction: Singapore
• Judgment Date: 09 January 2014
• Date: 09 January 2014
• Docket Number: Suit No 352 of 2013 (Registrar's Appeal No 310 of 2013)
• Court: High Court (Singapore)

Ling Yew Kong

Plaintiff

and

Teo Vin Li Richard

Defendant

[2014] SGHC 6

George Wei JC

Suit No 352 of 2013 (Registrar's Appeal No 310 of 2013)

High Court

Civil Procedure—Summary judgment—Whether settlement agreement tainted by illegality, unfair or unconscionable—Order 14 r 1 Rules of Court (Cap 322, R 5, 2006 Rev Ed)

Contract—Illegality and public policy—Gaming and wagering—Defendant failing to honour settlement agreement arising from earlier suit over alleged gaming contract—Whether defendant could rely on illegality to undermine settlement agreement

The plaintiff (‘Plaintiff’) and defendant (‘Defendant’) were business associates in a public company in Singapore, and got to know each other through various business dealings. In Suit No 733 of 2012 (‘the First Suit’), the Plaintiff claimed against the Defendant $730,000, alleged to have been lent to the Defendant to pay a debt the Defendant owed to one Foo Chek Hin. The Defendant denied this, claiming that there was an arrangement between them such that the Plaintiff would ‘act as a junket’ by offering credit in the form of non-negotiable chips to businessmen and friends of the Plaintiff and the Defendant. In doing so, the Defendant also raised the defence of illegality, in that the alleged debt was unenforceable as it was premised on a transaction which contravened s 110 (1) of the Casino Control Act (Cap 33 A, 2007 Rev Ed).

Suit No 733 of 2013 was eventually discontinued pursuant to a settlement agreement signed by both parties on 1 February 2013 (‘the Settlement Agreement’). In return, the Defendant agreed to pay the Plaintiff a sum of $330,000, and transfer shares worth $400,000 to the Plaintiff.

The Defendant transferred the shares, but failed to the make the other payments. As a result of this, the Plaintiff commenced Suit No 352 of 2013 (‘the Second Suit ‘) where he claimed against the Defendant the balance owing under the Settlement Agreement. Soon after, the Plaintiff took out an application for summary judgment. This was heard by an assistant registrar (‘the AR’), who granted the Defendant leave to defend upon condition that Defendant provided security of $330,000 in the form of a banker's guarantee by 18 September 2013. The Plaintiff then appealed against the decision of the AR.

Held, allowing the appeal:

(1) The legal issue before this court was whether having settled the First Suit, the Defendant could or should be allowed to raise the illegality defence again as a means of undermining the Settlement Agreement, viz, in arguing that the Settlement Agreement was tainted by the alleged illegality in the First Suit: at [28] .

(2) In relation to the First Suit, there was no finding that the Plaintiff was in fact running an illegal junket operation or that he was otherwise in breach of, or caught by provisions of the relevant legislation. It was unclear whether the debt owed to Foo Chek Hin had any connection with the alleged junket activities, and it was by no means certain that the Defendant would have been able to establish the illegality defence in the First Suit: at [46] .

(3) Whilst the general rule was that the settlement agreement alone would govern the relationship between the parties, there would be a residue of cases where the settlement agreement would not have the effect of preventing the re-opening of disputes. However, there was only a limited scope for the court to determine whether the terms of the compromise were fair and reasonable: at [69] and [70] .

(4) There was no evidence to support the Defendant's assertion that the Settlement Agreement was subject to or governed by an unrecorded/undocumented oral contract or understanding. Even if there was some evidence of an oral understanding, the parol evidence rule would have to be considered. The alleged oral understanding was clearly inconsistent with the written terms of the Settlement Agreement. It followed that leave to defend would not be granted on the basis of the alleged oral understanding or agreement between the parties: at [82] and [83] .

(5) Where a suit that was settled was clearly tainted by illegality, the settlement agreement might itself be affected by the illegality. The position was different, however, where there was a genuine dispute as to whether there was moneylending or gaming or some illegality that affected the original claim. When there was a genuine dispute as to whether an illegality defence might have applied in the previous case, then, there might be a greater argument that any settlement between the parties would be a truly bona fide one because of parties' differing legal positions: at [87] .

(6) Whether or not the Defendant could ‘rely’ on the illegality defence raised in the First Suit was a misleading question. The Settlement Agreement now purely governed the legal relationship between the parties, and technically, the Defendant was not allowed to ‘re-open’ the issues raised in the First Suit. However, since the facts leading to any alleged illegality would, in most cases, be essentially the same set of facts leading to the legal issues raised in the First Suit, the court had to look at those set of facts (as alleged and contested) to determine whether or not the Settlement Agreement was ultimately tainted by illegality. The burden of proof still fell upon the party resisting the enforcement of a settlement agreement, in showing how the settlement agreement was premised on circumstances which would afford him the defence of illegality, such that the court would not enforce the settlement agreement: at [90] .

(7) The question before the court was whether the Defendant had shown that the Settlement Agreement was premised on illegal circumstances, or that the Plaintiff had taken an ‘unfair advantage’ such that the Settlement Agreement should not be enforced. All the Defendant did was to rely on essentially the same facts and arguments which were raised and in dispute in the First Suit, and nothing more. There was a real dispute as to whether the claim was essentially for gaming debts and so contravened the relevant provisions. These were the circumstances in which the Settlement Agreement was entered into, and based on the arguments and the evidence, the Defendant had failed to show that the Settlement Agreement was tainted by illegality: at [91] .

(8) There was no evidence to suggest that the Plaintiff had in some way taken ‘unfair advantage’ of the Defendant. The Plaintiff was entitled to summary judgment since there was no reason to conclude that the Settlement Agreement was tainted by illegality, unfair or unconscionable: at [92] , [93] and [95] .

Abdul Salam Asanaru Pillai v Nomanbhoy & Sons Pte Ltd [2007] 2 SLR (R) 856; [2007] 2 SLR 856 (refd)

Bank für Gemeinwirtschaft v City of London Garages Ltd [1971] 1 WLR 149; [1971] 1 All ER 541 (refd)

Binder v Alachouzos [1972] 2 QB 151 (folld)

Burswood Nominees Ltd v Liao Eng Kiat [2004] 2 SLR (R) 436; [2004] 2 SLR 436 (refd)

Concentrate Engineering Pte Ltd v United Malayan Banking Corp Bhd [1990] 1 SLR (R) 465; [1990] SLR 514 (refd)

Ganesan Carlose & Partners v American Home Assurance Co [1994] 1 SLR (R) 223; [1994] 2 SLR 332 (refd)

Gay Choon Ing v Loh Sze Ti Terence Peter [2009] 2 SLR (R) 332; [2009] 2 SLR 332 (refd)

Lee Kuan Yew v Chee Soon Juan [2003] 3 SLR (R) 8; [2003] 3 SLR 8 (refd)

Poh Soon Kiat v Desert Palace Inc [2010] 1 SLR 1129 (refd)

Quek Chiau Beng v Phua Swee Pah Jimmy [2000] 3 SLR (R) 761; [2001] 1 SLR 762 (refd)

Real Estate Consortium Pte Ltd v East Coast Properties Pte Ltd [2011] 2 SLR 758 (folld)

Shunmugam Jayakumar v Jeyaretnam Joshua Benjamin [1996] 2 SLR (R) 658; [1997] 2 SLR 172 (refd)

Star City Pty Ltd v Tan Hong Woon [2002] 1 SLR (R) 306; [2002] 2 SLR 22 (refd)

Star Cruise Services Ltd v Overseas Union Bank Ltd [1999] 2 SLR (R) 183; [1999] 3 SLR 412 (refd)

Tan Sim Lay v Lim Kiat Seng [1996] 2 SLR (R) 147; [1996] 2 SLR 769 (refd)

Casino Control Act (Cap 33 A, 2007 Rev Ed) ss 2 (1) , 2 (1) (a) , 108 (9) , 108 (9) (a) , 110 (1)

Civil Law Act (Cap 43, 1994 Rev Ed) ss 6 (1) , 6 (2)

Civil Law Act (Cap 43, 1999 Rev Ed) s 5 (2) (consd) ;ss 5, 5 (1) , 5 (6)

Moneylenders Act (Cap 188, 2010 Rev Ed) s 14 (2)

Reciprocal Enforcement of Commonwealth Judgments Act (Cap 264, 1985 Rev Ed) s 3 (2) (f)

Rules of Court (Cap 322, R 5, 2006 Rev Ed) O 14 r 1, O 14 r 3, O 14 r 4

Yoong Nim Chor and Wong Xun-Ai (Khattar Wong LLP) for the plaintiff/appellant

Godwin Gilbert Campos (Godwin Campos LLC) for the defendant/respondent.

Judgment reserved.

George Wei JC

Introduction

1 This is an appeal by the plaintiff from the decision of the learned Assistant Registrar Teo Guan Kee (‘the AR’) in Summons No 3506 of 2013 (‘Sum 3506’) delivered on 28 August 2013, granting the defendant conditional leave to defend Suit No 352 of 2013 (‘the Second Suit’) under O 14 r 4 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (‘ROC’). The subject matter of the Second Suit relates back to an earlier action between the same parties which was supposed to have been ‘resolved’ by means of a settlement agreement dated 1 February 2013 (‘the Settlement Agreement’).

2 The appeal involves an interesting legal issue which is whether, and if so to what degree, the alleged illegality in an action would taint a settlement agreement arising out of that action.

3 After hearing the parties, I am allowing the appeal and reversing the decision of the AR granting conditional leave to defend. Summary judgment is, therefore, entered in favour of the plaintiff.

The facts

The parties

4 The plaintiff and defendant were business associates in a public company in Singapore, Firstlink Investments Corporation Limited (‘Firstlink’). The plaintiff, Ling Yew Kong, is the executive chairman of Firstlink (‘the Plaintiff’), and the defendant, Teo Vin Li Richard (‘the Defendant’), got to know the Plaintiff through various business dealings.

5 The...