Liu Shu Ming and another v Koh Chew Chee and another matter

• Jurisdiction: Singapore
• Judge: Belinda Ang Saw Ean JCA
• Judgment Date: 28 April 2023
• Neutral Citation: [2023] SGHC(A) 15
• Court: High Court Appellate Division (Singapore)
• Docket Number: Civil Appeal No 23 of 2022 and Summons No 28 of 2022
• Hearing Date: 01 November 2022,29 September 2022
• Citation: [2023] SGHC(A) 15
• Year: 2023
• Plaintiff Counsel: The appellants in person
• Defendant Counsel: Winston Kwek Choon Lin, Li Kun Hang and Dion Chan (Rajah & Tann Singapore LLP)
• Published date: 04 May 2023

Woo Bih Li JAD (delivering the judgment of the court):Introduction

He who asserts must prove. This is one of the golden rules of litigation. The present appeal against the decision of a judge of the General Division of the High Court (the “Judge”) in Koh Chew Chee v Liu Shu Ming and another [2022] SGHC 25 (the “Judgment”) is a salutary reminder of the consequences of failing to adduce the necessary evidence to prove one’s case.

The facts and the Judgment belowBackground and the deal struck between the parties

The first and second appellants are Liu Shu Ming and Tong Xin (“Mr Liu” and “Ms Tong” respectively and collectively, the “Appellants”). They were involved in the “condotel” business where they provided condominium units for short-term accommodation. They ran this business through a company called MaxStays (Philippines) Inc (“MaxStays”) in the Philippines. In 2016, the Appellants wanted to expand their business and began looking for investors. One such investor they sought out was the respondent (“Ms Koh”).

This was the investment offered by the Appellants: the investor would purchase condominium units and lease them back to the Appellants at a rate amounting to approximately 6–7% of the annual return on the principal purchase price.

Ms Koh found this rate of interest to be attractive and became an investor. On 30 May 2017, she entered into a series of agreements (the “Contracts”) with the Appellants. These were made up of two components.First, an agreement for Ms Koh to purchase five condominium units (“the Units” and “the Purchase Agreement”). The Units consisted of three units, ie, Unit 806A, 615A and 614A at Fort Victoria (“the Victoria Units”) and two units, Unit 18H and 18B of Alessandro Tower at the Venice Residences (“the Venice Units”).¹Second, an agreement for the Appellants to rent the Units from Ms Koh for an initial period of three years, that is renewable every three years (“the Leaseback Agreement”). This component of the agreement was where Ms Koh would earn her return on investment, as the rent paid to her was meant to provide around a 6–7% annual return.

Both the Purchase Agreement as well as the Leaseback Agreement were captured in writing, which took the form of a “leaseback guarantee” and a “receipt”. As a preliminary point, while it was recognised by the Judge that the receipts did not constitute an agreement for the sale of land nor did the leaseback guarantee constitute an investment contract per se, nothing turns on this because it was accepted by the parties that there was an agreement for the sale and leaseback of the Units.

Apart from the Purchase Agreement and the Leaseback Agreement, one other important component of the deal struck between the parties, according to Ms Koh, was that if the market price of the Units had fallen upon the expiry of the leaseback period, the Appellants would buy the Units back from Ms Koh at the principal purchase price paid. However, if the market price of the Units had gone up, Ms Koh could sell the Units on the open market (the “Alleged Buyback Term”).

The Judge, however, found that Ms Koh had not proved the existence of the Alleged Buyback Term: Judgment at [35]. Amongst other reasons, the Judge held that if the Alleged Buyback Term was so important to Ms Koh for her to enter into the Contracts, she would have at least queried whether that term was still on the table given that it was missing from the written documents (ie, the leaseback guarantee and receipt) which the Appellants had produced for her signature shortly after she had orally accepted the Contracts. Ms Koh has not sought to challenge the Judge’s findings on this point in the present appeal.

Pursuant to the Contracts, Ms Koh began paying the purchase price for the Units, making her final payment in August 2018. It is undisputed that Ms Koh had paid S$1,468,895.69 to the Appellants. What is disputed, however, is whether this constituted full payment of the entire purchase price, as the Appellants’ case is that there was a shortfall.

Ms Koh discovers issues and allegedly terminates the Contracts

The Appellants began falling behind on rental payments in late 2019. To explain this, Mr Liu told Ms Koh in a WeChat message on 15 October 2019 that he was facing financial difficulties and thus could not pay the rent.

Investigations by Ms Koh through her solicitors showed that the Units were encumbered. Specifically, she found that there were mortgages over the Victoria Units, that the Appellants had assigned their rights and interests in the Victoria Units to MaxStays, and that MaxStays had in turn assigned these rights and interests to the Philippine National Bank. With regard to the Venice Units, she similarly discovered that the Appellants had assigned their rights and interests in these units to MaxStays.

Ms Koh, accompanied by her husband, met with Mr Liu on 16 November 2019. Ms Koh secretly recorded this meeting, and the recording and its transcript were produced in evidence. Essentially, Mr Liu tried to explain the current state of affairs, and the meeting ended with some suggestion that a resolution of their dispute would be forthcoming.

Further communications between parties regarding this potential resolution, however, bore no fruit. Ms Koh allegedly terminated the Contracts on 27 December 2019.

The claim in the High Court

Ms Koh filed an action against the Appellants on 14 February 2020 in HC/S 143/2020. Her main claim was for breach of the Contracts arising from the Appellants’ failure to transfer title to the Units and the non-payment of rent under the Leaseback Agreement. Ms Koh sought to recover damages representing two heads of loss. First, the sum she would have regained had the Appellants not acted in breach and had thus performed the obligation to repurchase the Units. Second, the rental she would have earned if the Leaseback Agreement had continued.

Ms Koh’s alternative claim was for fraudulent misrepresentation. She alleged that the Appellants had made many false representations to induce her to enter into the Contracts. In particular, Ms Koh pointed to the assurance, which the Appellants had made, that they would repurchase the Units. She said that without such an assurance, she would not have entered into the Contracts. In respect of her claim for fraudulent misrepresentation, Ms Koh sought to recover the sum of money she paid, less payments received from the Appellants under the Leaseback Agreement.

The Judge allowed Ms Koh’s claim for breach of contract, but not the claim for fraudulent misrepresentation. There is, before us, no appeal against the Judge’s decision to dismiss the claim for fraudulent misrepresentation.

In arriving at the conclusion that the Appellants had breached the Contracts, the Judge found it appropriate to characterise the two components of the Contracts as parts of a broader commercial investment. The reasons for doing so were twofold. First, the components of the Contracts were evidenced within single documents. Second, these documents did not contain any of the terms or details ordinarily seen in contracts for the sale of real property or leases. The lack of such detail strongly suggested that parties appear to have understood the Contracts as loose collections of obligations which facilitated Ms Koh’s investment in the business.

With this characterisation of the Contracts in mind, the Judge held that the Appellants’ obligation to transfer legal title in the Units to Ms Koh was a condition of the Contracts, the breach of which entitled Ms Koh to terminate the Contracts and sue for damages. An essential part of the Contracts was that Ms Koh would obtain a proprietary interest in the Units. Without obtaining such an interest, Ms Koh’s payment to the Appellants would be akin to an outright, unsecured loan. This was not what the parties had intended (Judgment at [97]–[98]).

Having found that there had been a breach of the Contracts and termination thereof, the Judge then turned to consider the issue of damages. This exercise was rendered more complex because of the manner in which Ms Koh’s case had been run.

Ms Koh had sought to recover her principal investment of around S$1.5m based solely on the Alleged Buyback Term. She submitted that on the standard measure of damages, if the Appellants had performed the Contracts, she would have recovered her principal investment. This was entirely orthodox.

There was, however, one problem. The Judge had found that there was no Alleged Buyback Term. This meant that damages should be awarded for the Appellants’ failure to deliver title to real property on the expectation basis, ie, what Ms Koh would have expected to receive if the Appellants had performed the Contracts by transferring title to her. Damages would be measured by taking the market value of the property at the time when title should have been transferred and deducting the contract price if that had not already been paid. If the contract price had been paid, as Ms Koh alleged, then the measure of damages would simply be the market value of the Units at the time when title should have been transferred. The difficulty the Judge faced was that Ms Koh did not adduce clear evidence to establish when title should have been transferred. More importantly, she did not adduce evidence to prove the market value of the Units.

Ultimately, the Judge held that the Appellants were liable to pay reliance damages, ie, the money which Ms Koh had expended on the Contracts, instead of expectation damages. The Judge was of the view that Ms Koh was entitled to recover S$1,468,895.69 as her full payment of the purchase price and ₱340,504.50 as her costs of incorporating a Philippine company, LK (Philippines), to be her nominee to whom title was to be transferred. He then set-off the sum of S$202,727 which Ms Koh had received as rental payments from the leaseback arrangement....