Ma Binxiang v Hainan Hui Bang Construction Investment Group Ltd

• Jurisdiction: Singapore
• Judge: Woo Bih Li JAD,Quentin Loh JAD,Hoo Sheau Peng J
• Judgment Date: 27 October 2022
• Docket Number: Civil Appeal No 20 of 2022
• Court: High Court Appellate Division (Singapore)

Ma Binxiang

and

Hainan Hui Bang Construction Investment Group Ltd

[2022] SGHC(A) 37

Woo Bih Li JAD, Quentin Loh JAD and Hoo Sheau Peng J

Civil Appeal No 20 of 2022

Appellate Division of the High Court

Contract — Formation — Parties alleging existence of three different oral agreements — Whether these oral agreements were proved on evidence

Evidence — Presumptions — Whether court entitled to presume that money transferred to another, in absence of plausible explanation for transfer, was loan

Evidence — Proof of evidence — Standard of proof — Whether trial judge thought he had to choose between parties' competing versions of events — Whether trial judge proceeded on basis that he could also find that neither version of events had been proved

Foreign Law — People's Republic of China — Notice by Supreme People's Court of Issuing the Minutes of the National Courts' Civil and Commercial Trial Work Conference in 2019 (“SPC 2019 Notice”) — Article 33 SPC 2019 Notice — Whether Art 33 SPC 2019 Notice required moneys to be returned if alleged agreement under which transfer was made was not proved

Trusts — Express trusts — Whether express trust was constituted under laws of People's Republic of China — Whether three certainties needed for formation of express trust under Singapore law were satisfied

Trusts — Resulting trusts — Whether laws of People's Republic of China recognised resulting trust — Whether resulting trust arose under Singapore law if contract relied on to prove absence of intention to benefit transferee was not proved

Held, allowing the appeal:

Whether Zhang Wei's Arrangement and the Asset Exchange Agreement were proved

(1) The documentary evidence did not support the existence of Zhang Wei's Arrangement: at [33] and [34].

(2) Neither did the Judge err in rejecting the existence of the Asset Exchange Agreement. It made no commercial sense. HHBC would have incurred a significant premium (viz, RMB1,189,071.74 of Mr Ma's personal income tax arising in respect of the Accounts) simply to, in effect, remit money out of the PRC: at [39] and [42].

(3) The Asset Exchange Agreement also appeared to be contradicted by the Declaration. The Declaration only disclosed an obligation or acknowledgment on Mr Ma's part and none from HHBC: at [40].

Whether the Investment Agreement was proved

(4) The Judge's approach to applying the civil standard of proof was unclear. It could not be determined if he had assumed that he had to find that either of the allegations regarding the Investment Agreement or Zhang Wei's Arrangement was established (ie, the binary approach), or if he proceeded on the basis that he could also find that neither had been proved. In these circumstances, the Judge's findings invited even closer scrutiny than would ordinarily be the case: at [45] and [49].

(5) The binary approach was inconsistent with the requirement for the claimant to prove his case on the balance of probabilities. A trier of fact was not bound to prefer one of the parties' assertions. A third alternative was to find that the claimant failed to discharge his burden of proof: at [46].

(6) The Investment Agreement had not been proved. The Judge failed to give weight, or at least, adequate weight to the factors militating against the existence of the Investment Agreement: at [82].

(7) First, HHBC's omission to confirm with Mr Ma his expected rate of return on the investments to be made militated against the existence of the Investment Agreement. This agreement would only have been profitable for HHBC if Mr Ma could promise a return on investment exceeding 12% per annum, which was the rate at which HHBC had allegedly borrowed the Sum from the Intermediaries: at [60].

(8) Separately, the lack of evidence on the interest rate, as well as on any other term of the loans, cast doubt on Mr Li's explanation that the moneys transferred by the Intermediaries to one of Mr Ma's Accounts constituted loans by them to HHBC. This in turn affected the credibility of the existence of the Investment Agreement, the viability of which depended on HHBC obtaining liquidity from the Intermediaries: at [61] and [64].

(9) Second, the absence of details of Mr Ma's remuneration under the Investment Agreement weighed against the existence of the agreement. Mr Li, HHBC's only factual witness with first-hand knowledge of the alleged formation of the Investment Agreement in 2015, equivocated over whether parties had any implicit understanding as to the rate of Mr Ma's remuneration: at [66] and [67].

(10) That HHBC only pleaded that the parties had some understanding as to Mr Ma's remuneration in Further and Better Particulars, filed some six months after the original Statement of Claim, also suggested that Mr Li was making up the terms of the Investment Agreement as he went along: at [69].

(11) Third, Mr Li's evidence on when the alleged Investment Agreement had been formed changed from time to time. These inconsistencies undermined his credibility: at [70].

(12) Fourth, there was no contemporaneous evidence between Mr Ma and Mr Li relating to the Investment Agreement or internal evidence within HHBC about it: at [71].

(13) Fifth, to prove its version of events, HHBC relied on certain transfer notices from each of the Intermediaries confirming that it/he had transferred the requested sums to one of Mr Ma's Accounts. However, the transfer notices had limited probative value because they did not allude to the Investment Agreement. They did not establish that the Intermediaries had transferred the Sum to Mr Ma under loans taken out by HHBC or that the purpose of these transfers was to give effect to the Investment Agreement: at [79].

(14) Finally, the Declaration was deficient as it failed to refer to the Investment Agreement. It was not the case that parties had not thought to mention the agreement. Mr Li testified that the first of two reasons for which HHBC wanted the Declaration was to record the existence of the Investment Agreement: at [80].

Whether Mr Ma remained liable even if neither side proved the oral agreement that it/he relied upon

Trust claims

(15) If PRC law applied, the Declaration did not create a valid express trust and a resulting trust was not recognised: at [87].

(16) Even if Singapore law applied, no express trust was constituted by the Declaration because certainty of intention was not established: at [89].

(17) As for a resulting trust under Singapore law, HHBC's case was factually rooted in the putative Investment Agreement, in that it relied on the agreement to prove that it did not intend the Sum to benefit Mr Ma. But HHBC had failed to prove the existence of the Investment Agreement: at [90].

Restitution

(18) HHBC did not identify the cause of action that entitled it to the remedy of restitution. That cause of action was unjust enrichment. HHBC did not plead unjust enrichment under Singapore law and could not now rest its claim on it: at [91].

SPC 2019 Notice

(19) There were two obstacles in the way of HHBC's claim based on the SPC 2019 Notice. First, Art 33 of the SPC 2019 Notice (which was foreign law) was not pleaded as a substantive cause of action although HHBC argued that its effect was pleaded: at [94].

(20) Second, neither party's PRC law expert opined on whether Art 33 of the SPC 2019 Notice required Mr Ma to return the Sum to HHBC if HHBC failed to prove the existence of the Investment Agreement. It was possible that Art 33 was confined to cases where the evidence revealed that parties in fact entered into a contract but the contract failed to be binding, for instance, because of a breach of formalities or vitiating factors recognised in PRC law: at [95] to [97].

Presumption of repayment

(21) The presumption of repayment in Power Solar System Co Ltd v Suntech Power Investment Pte Ltd[2018] SGHC 233 was not applied. In any case, it could not be presumed that the Sum was a loan that Mr Ma had to repay because Mr Ma clearly denied that he was legally obliged to repay the Sum and Investment Returns: at [100] and [101].

Case(s) referred to

Baker, Michael A v BCS Business Consulting Services Pte Ltd [2020] 4 SLR 85 (folld)

Independent State of Papua New Guinea v PNG Sustainable Development Program Ltd [2020] 2 SLR 200 (folld)

Ng Chee Chuan v Ng Ai Tee [2009] 2 SLR(R) 918; [2009] 2 SLR 918 (folld)

Poh Chiak Ow v United Overseas Bank Ltd [2021] SGHC(A) 6 (folld)

Power Solar System Co Ltd v Suntech Power Investment Pte Ltd [2018] SGHC 233 (not folld)

PT Bayan Resources TBK v BCBC Singapore Pte Ltd [2019] 1 SLR 30 (folld)

State-Owned Company Yugoimport SDPR, The v Westacre Investments Inc [2016] 5 SLR 372 (folld)

Suying Design Pte Ltd v Ng Kian Huan Edmund [2020] 2 SLR 221 (folld)

Tan Chin Hock v Teo Cher Koon [2022] 2 SLR 314 (folld)

Facts

The appellant, Ma Binxiang (“Mr Ma”), was a national of the People's Republic of China (“PRC”). From October 2010 to March 2018, Mr Ma was an employee of Weiye Holdings Ltd (“Weiye”), a company incorporated in Singapore which was principally based in the PRC. The respondent was Hainan Hui Bang Construction Investment Group Ltd (“HHBC”), a company incorporated in the PRC.

The dispute revolved around S$1,784,350 (the “Sum”) that HHBC allegedly caused certain intermediaries (the “Intermediaries”) to transfer to Mr Ma between March to May 2015. HHBC claimed that one Mr Li Keyi (“Mr Li”), on behalf of HHBC, had entered into an oral “Investment Agreement” with Mr Ma. Under this agreement, Mr Ma was to use the Sum to invest in stocks in Singapore and/or Hong Kong on behalf of HHBC. HHBC claimed to have entered into loan agreements with the Intermediaries to procure the transfer of the Sum to Mr Ma. This was allegedly at an interest rate of 12% per annum. According to HHBC, Mr Ma used three bank and/or securities accounts to manage the investments referred to collectively as the “Accounts”.

On the other hand, Mr Ma alleged that...