Magesvari D/O Jaganathan v Manmeet Singh and another

• Jurisdiction: Singapore
• Judge: Jonathan Toh Jun Hian
• Judgment Date: 21 March 2023
• Neutral Citation: [2023] SGDC 51
• Court: District Court (Singapore)
• Docket Number: District Court Originating Claim No 837 of 2022, (Summons No 3439 of 2022), HC/RAS 2/2023
• Hearing Date: 02 February 2023
• Citation: [2023] SGDC 51
• Year: 2023
• Plaintiff Counsel: Krishnasamy Siva Sambo (Pathway Law Practice LLC)
• Defendant Counsel: Lee Nicolette Wanling (Phoenix Law Corporation)
• Subject Matter: Civil Procedure,Pleadings,Striking out,Whether statement of claim disclosed a reasonable cause of action
• Published date: 08 June 2023

District Judge Jonathan Toh Jun Hian:

This case concerns a dispute over the beneficial ownership of the shares and business of The Chillout Place Pte. Ltd (the “Company”).

The appellant applied to strike out the whole of the respondents’ claim under O 9 r 16(1)(a) of the Rules of Court 2021 for having disclosed no reasonable cause of action. I heard and dismissed the appellant’s application on 2 February 2023. She has now filed an appeal and I set out my grounds of decision in full.

Relevant facts and procedural history

The respondents initially commenced DC/DC 614/2020 (“DC 614”) against one Mr Anbalagan s/o Ayyakannu (“Anbalagan”) on 1 March 2020. The crux of DC 614 was that the respondents had provided monies for the purchase of the Company’s shares, which were then held in Anbalagan’s name. The Company operated a nightclub called “Club Rumours” at the Concorde Hotel and Shopping Mall, which Anbalagan managed. Anbalagan later took the position that the Company and its business belonged solely to him. The respondents then commenced DC 614 for a declaration that Anbalagan was holding the Company and its business on trust for them, as well as an account of profits and/or damages.

The respondents alleged that in the midst of the DC 614 proceedings, Anbalagan transferred the entirety of the Company’s shares to his wife, the appellant, on or around 7 September 2020.

Subsequently, Anbalagan was adjudged bankrupt on 24 June 2021. On 20 January 2022, the respondents obtained leave of court to prosecute DC 614. Anbalagan was not granted leave by the private trustee in bankruptcy to defend DC 614. The respondents then entered judgment in default of defence for the following orders: 1. It is declared that the Defendant is holding the company, The Chillout Place (UEN no. 201117758M) and its business on trust on behalf of the Plaintiffs; 2. It is declared that all the shares of the company, The Chillout Place (UEN no. 201117758M), are to be split equally between the Plaintiffs; 3. The Defendant is to account for the collections and/or profits of The Chillout Place's (UEN no. 201117758M) business from 1st December 2019 to date, or in the alternative, the Defendant is to reimburse the sum of $220,000.00 to the Plaintiffs; 4. Damages to be assessed at hearing; 5. Costs in the sum of $3,045.69 payable by the Defendant to the Plaintiffs.

(the “DC 614 JID”).

After obtaining the DC 614 JID, the respondents commenced the present claim against the appellant. In summary, they allege that: Pursuant to the DC 614 JID, Anbalagan was a trustee holding the Company’s shares and business on trust for the respondents and owed them fiduciary duties.¹ Anbalagan breached those duties by transferring the Company’s shares to the appellant on or around 7 September 2020.² The appellant knew of Anbalagan’s breach of trust and therefore held the Company’s shares and business on trust for the respondents,³ and also owed them fiduciaries duties regarding the trust property.⁴ The appellant breached those duties by directing the Company’s profits and collections to her personal bank account.⁵ The appellant dishonestly assisted⁶ in Anbalagan’s breach of trust and/or was a knowing recipient of trust property.⁷ The appellant was unjustly enriched in respect of the Company’s shares, business and profits, and the respondents are entitled to restitution.⁸ The appellant conspired with Anbalagan to injure the respondents through lawful and/or unlawful means.⁹ The appellant had converted the Company’s shares, business and profits.¹⁰

The appellant’s arguments

In the hearing before me, the appellant advanced two main grounds to strike out the respondents’ claim.

First, the appellant argued that the DC 614 JID was irregular. The foundation of the claim against her was the declaration made in the DC 614 JID that Anbalagan held the Company’s shares and business on trust for the respondents. As such, if the DC 614 JID was irregular, then the entire claim against her should fall away.

Second, she argued that the respondents were precluded by way of an election or estoppel from commencing the present claim. Her argument was that they had chosen to file a proof of debt against Anbalagan’s bankruptcy estate. As such, they had irrevocably chosen to pursue repayment of money as a remedy and was thus precluded from maintaining that the Company’s shares and business were held on trust for them.

For completeness, the appellant had advanced a third argument in written submissions that the respondents were barred by the doctrine of res judicata from bringing the present claim because of the overlapping issues with DC 614. However, this was not pursued in oral argument by the appellant’s counsel, which was a correct decision given that it was a non-starter. The respondents’ claim against the appellant only arose after Anbalagan transferred the Company’s shares to the appellant, which in turn only took place after the respondents commenced DC 614. Thereafter, DC 614 concluded by way of the DC 614 JID without any decision on the merits. None of the three subspecies of res judicata, namely cause of action estoppel, issue estoppel, or the extended doctrine of res judicata would apply. As this argument was not pursued further, I will say no more on it.

The applicable principles for a striking out application under O 9 r 16(1)(a) of the Rules of Court 2021

O 9 r 16(1) of the Rules of Court 2021 (“ROC 2021”) provides: 16.—(1) The Court may order any or part of any pleading to be struck out or amended, on the ground that — (a) it discloses no reasonable cause of action or defence; (b) it is an abuse of process of the Court; or (c) it is in the interests of justice to do so,

and may order the action to be stayed or dismissed or judgment to be entered accordingly.

The appellant relied solely on O 9 r 16(1)(a) – that the respondents’ claim disclosed no reasonable cause of action.

In Iskandar bin Rahmat and others v Attorney-General and another [2022] SGCA 58 at [17], the Court of Appeal explained that:

Under O 9 r 16(1)(a) [of] ROC [2021], the test is whether the action has some chance of success when only the allegations in the pleadings are concerned: Gabriel Peter & Partners (suing as a firm) v Wee Chong Jin and others [1997] 3 SLR(R) 649 (“Gabriel Peter”) at [21]. If that is found to be the case, then the action will not be struck out.

Further, O 9 r 16(2) of ROC 2021 provides that “[n]o evidence is admissible on an application under paragraph (1)(a)”.

With these principles in mind, I turn to the appellant’s arguments.

The DC 614 JID

The terms of DC 614 JID...