Ma Ong Kee v Cham Poh Meng and another suit

• Jurisdiction: Singapore
• Judge: Vinodh Coomaraswamy JC (as he then was)
• Judgment Date: 30 July 2013
• Neutral Citation: [2013] SGHC 144
• Court: High Court (Singapore)
• Docket Number: Suit No 478 of 2010 consolidated with Suit No 654 of 2010
• Published date: 28 October 2013
• Year: 2013
• Hearing Date: 28 January 2013,15 April 2013,30 January 2013,31 January 2013,01 February 2013,29 January 2013,19 March 2013,12 April 2013
• Plaintiff Counsel: Subramaniam Pillai, Jasmin Yek and Melanie Tien (Colin Ng & Partners LLP)
• Defendant Counsel: Nicholas Jeyaraj s/o Narayanan (Nicholas & Tan Partnership LLP)
• Subject Matter: Debt and Recovery,Counterclaim,Agency,Duties of Agent,Duty to account
• Citation: [2013] SGHC 144

Vinodh Coomaraswamy J:

Before me are two consolidated actions. Suit No. 478 of 2010/F (“S478”) is an action by Mr Ma Ong Kee (“Mr Ma”) against Mr Cham Poh Meng (“Mr Cham”). Suit No. 654 of 2010/Q (“S654”) is an action by Mr Cham against Mr Ma.

In or about October 2004, Mr Ma and Mr Cham began a business collaboration. That collaboration included investing in shares in publicly-quoted companies offered in Singapore and Hong Kong through initial public offerings (“IPOs”) and secondary listings (collectively “Placements”). These investments were transacted through a specific trading account opened by Mr Cham with Malayan Banking Berhad (“Maybank”). These investments ceased in March 2007. Mr Cham then sold the shares remaining in the trading account, closed it and paid the cash balance over to a representative of Mr Ma.¹ Having achieved at least apparent closure, Mr Ma and Mr Cham then parted ways.

The claims and defences in the two suits

On 1 July 2010, more than 3 years later, Mr Ma commenced S478 against Mr Cham. In that suit, Mr Ma sought to recover money which he had advanced to Mr Cham between June 2004 and March 2006 to enable Mr Cham to set up a food and beverage (“F&B”) business. By his re-amended Statement of Claim dated 12 January 2011, Mr Ma settled on $398,000 as the quantum of his claim. Mr Cham admits that he borrowed money from Mr Ma for his F&B business. But in his pleadings, Mr Cham puts his debt at $384,000 and not $398,000.² Mr Cham claims, further, that he discharged this debt on 30 October 2006 by paying $384,000.50³ to UOB Kay Hian Pte Ltd (“Kay Hian”) on Mr Ma’s behalf and on his instructions.⁴

Mr Cham commenced S654 against Mr Ma on 27 August 2010. In that suit, Mr Cham seeks to recover from Mr Ma the sum of $1,121,655⁵ which Mr Cham says he paid to Kay Hian at Mr Ma’s request on 25 October 2006.⁶ Mr Ma filed a counterclaim in S654. In it, he seeks against Mr Cham the equitable remedy of an account of Mr Cham’s trading in Placements through Maybank (see [2] above). Mr Ma avers that Mr Cham carried out this trading as Mr Ma’s agent and fiduciary.

Both suits were consolidated by an order of court dated 25 July 2011. The consolidated suits were tried before me.

After hearing the evidence and the parties’ submissions, I decided substantially in favour of Mr Ma and entirely against Mr Cham. I entered judgment in the following terms: I entered judgment for Mr Ma in S478 for $398,000 plus interest at 5.33% per annum from the date of commencement of S478 to the date of judgment; I dismissed Mr Cham’s claim in S654; I dismissed Mr Ma’s counterclaim in S654; and I ordered Mr Cham to pay Mr Ma half the costs of the consolidated action on the standard basis.

Mr Cham has appealed against my decision. I now set out the grounds of my decision.

Mr Ma and Mr Cham meet Their background

Mr Cham has a degree in business administration from the Royal Melbourne Institute of Technology.⁷ He started his career as a Territory Manager with World of Sports Pte Ltd⁸ before moving on to Trans-Island Bus Services as an Operations Manager.⁹ There is no evidence before me – despite Mr Cham having been asked to disclose and adduce it – that Mr Cham was a man of means, at least in the period from 2004 to 2007.

Mr Ma is, and was at all material times, a man of substantial means and a prominent and sophisticated businessman. He has a background in corporate finance and in the capital markets. He has been involved in several multi-million dollar transactions involving public listed companies in both Singapore and Malaysia.¹⁰

Mr Ma employs Mr Cham in a series of positions

Mr Ma came to know of Mr Cham through Mr Cham’s wife, who then worked in one of Mr Ma’s companies.¹¹ At her suggestion, Mr Cham was appointed as Operations Manager at MSM Holdings Pte Ltd (“MSM”), a company linked to Mr Ma, at some time in late 1999 or early 2000.¹² Mr Cham held that position until 2002, when Mr Ma secured a job for him as the General Manager of Snoopy Restaurants Singapore Pte Ltd (“Snoopy Restaurants”).¹³ Snoopy Restaurants ceased operations¹⁴ in 2004 and Mr Cham’s employment there came to an end in June of that year.¹⁵

Mr Ma and Mr Cham start their collaboration Mr Cham’s F&B business

Soon after his employment at Snoopy Restaurants ceased, Mr Cham decided to set up an F&B business for his own account. Mr Ma agreed to finance it.¹⁶ The vehicle for Mr Cham’s F&B business was a company linked to Mr Ma through his wife and known as Triwell Marketing Pte Ltd (“Triwell”).¹⁷ Mr Cham became a director and shareholder of Triwell. Mr Ma made 11 loans to Mr Cham for his F&B business between 12 June 2004 and 10 March 2006 totalling $518,000 as follows:¹⁸

No.	Date	Amount
1.	12 Jun 2004	$120,000
2.	2 Aug 2004	$10,000
3.	26 Aug 2004	$10,000
4.	30 Sep 2004	$60,000
5.	1 Oct 2004	$95,000
6.	10 Oct 2004	$70,000
7.	12 Jan 2005	$35,000
8.	3 Mar 2005	$70,000
9.	28 Mar 2005	$12,000
10.	11 Dec 2005	$8,000
11.	10 Mar 2006	$28,000
	Total	$518,000

Mr Cham admits, though not without initially prevaricating (see [49] below), that Mr Ma lent him as a matter of historical fact the sum of $518,000 for his F&B business.¹⁹ It is common ground, however, that by the time Mr Ma commenced S478 on 1 July 2010, his claim to recover the initial loan of $120,000 extended on 12 June 2004 had become time-barred (see [33] below), leaving only $398,000 out of the $518,000 recoverable by action.

InvestCapital Limited

At around the same time as the first of Mr Ma’s advances to Mr Cham in June 2004, Mr Ma gave Mr Cham yet another job in a company known as InvestCapital Limited (“InvestCapital”).²⁰ InvestCapital is a company incorporated in the British Virgin Islands.²¹ Mr Ma is, and was at all material times, the sole beneficial owner of InvestCapital.²² It is and was Mr Ma’s personal vehicle for investing in Placements. Investments of this nature were within the scope of Mr Ma’s training, experience and competence. Investments of this nature were not, at least not in 2004, within the scope of Mr Cham’s training, experience and competence. Mr Cham claims to have had personal experience in investing in equities since the age of 21 and claims to have assisted his mother in her investments in the commodities market when he was 18.²³ All that may be true. But Mr Cham does not suggest, let alone attempt to prove, that he had any experience before 2004 in investing in Placements on the scale of what was to come.

Mr Ma gave Mr Cham the title of “Settlement Head” at InvestCapital. It is common ground that Mr Cham was in charge of InvestCapital’s day-to-day operations.²⁴ To this end, Mr Ma appointed Mr Cham as an authorised signatory for all of InvestCapital’s business-related documentation from 2004 until early 2005.²⁵ Mr Ma also introduced Mr Cham to his stockbrokers’ representatives and instructed them to deal directly with Mr Cham on Mr Ma’s Placement investments.²⁶ Mr Cham therefore handled on his own all the administrative aspects of InvestCapital as a company²⁷ and also of InvestCapital’s transactions in Placements.²⁸ This included liaising with and coordinating with stockbrokers and placement agents, making administrative arrangements for payments, delivering and receiving settlement documents,²⁹ dealing with InvestCapital’s company secretary³⁰ and monitoring³¹ and reporting InvestCapital’s business.³²

Concurrently with his employment at InvestCapital, Mr Cham also assisted Mr Ma in the administrative aspects of Mr Ma’s personal investments transacted in his own name.³³

Mr Cham opens a margin trading account at Maybank

On 7 October 2004, shortly after Mr Cham began his employment with InvestCapital, Mr Cham opened an account (the “Margin Account”) in his personal name with Maybank under its Enhanced Share Financing Scheme.³⁴ The Margin Account permitted Mr Cham to borrow between $300,000 and $500,000 from Maybank by way of an overdraft facility as part-financing to purchase publicly-quoted shares and related securities, including Placements. The portion of the Placement investment that Maybank did not lend money to finance would have to be financed independently.³⁵ In exchange for its lending, Maybank required the shares acquired through the Margin Account to be custodised with its nominee custodian and took a security interest over those shares. Investments in Placements through the Margin Account were subject to a loan-to-value requirement at the time of purchase and to ongoing margin requirements.³⁶

I accept that Mr Cham opened the Margin Account at the direction of Mr Ma and as part of his collaboration with Mr Ma. I accept further that Mr Ma made prior arrangements with Maybank for the margin trading facility and introduced Mr Cham to Maybank. It is not in dispute that Mr Ma had a longstanding banking relationship with Maybank.³⁷ Indeed, on the same day that Mr Cham opened the Margin Account, Mr Ma opened a current account in his sole name at Maybank.³⁸ And Mr Cham does not suggest that he had any sort of prior relationship with Maybank that would lead Maybank to extend credit to him personally, even on a secured basis.

I therefore reject Mr Cham’s evidence that he opened the Margin Account of his own accord.³⁹ He opened it as Mr Ma’s agent. Further, for the reasons set out at [67] to [104] below, I find that it was Mr Ma and not Mr Cham who funded the Margin Account while it was active.

Fullerton Ventures Pte Ltd

On 29 April 2005, Fullerton Ventures Pte Ltd (“Fullerton”) was incorporated to undertake private investments and to provide management consultancy services.⁴⁰ Its three protagonists were Mr Cham, Mr Teo Kian Huat (“Mr Teo”) and Mr Loh Peng Chai (“Mr Loh”). Mr Ma’s evidence is that Mr Teo and Mr...