Mann Holdings Pte Ltd and another v Ung Yoke Hong

JurisdictionSingapore
JudgeLai Siu Chiu SJ
Judgment Date23 March 2018
Neutral Citation[2018] SGHC 69
CourtHigh Court (Singapore)
Docket NumberSuit No 605 of 2015
Published date27 November 2018
Year2018
Hearing Date27 October 2017,26 October 2017,23 November 2017,15 December 2017,24 November 2017,30 October 2017,11 December 2017
Plaintiff CounselJoseph Tay Weiwen, Chng Yan and Fong Zhiwei, Daryl (Shook Lin & Bok LLP)
Defendant CounselMulani Prakash P and Tanya Thomas Vadaketh (M & A Law Corporation)
Subject MatterDebt and recovery,Loan or deposit
Citation[2018] SGHC 69
Lai Siu Chiu SJ: Introduction

At the conclusion of the trial of Suit No 605 of 2015 (“this Suit”) and after considering the parties’ closing submissions, I delivered oral judgment in favour of Mann Holdings Pte Ltd (“the first plaintiff”) and Chew Ghim Bok (“Chew”) (collectively “the plaintiffs”) against Ung Yoke Hong (“the defendant” also known as “Vincent”) in the sum of RM4m (Malaysian Ringgit 4 million) with interest at 5.33% from the date of the writ of summons (19 June 2015) and costs to be taxed on a standard basis unless otherwise agreed.

As the defendant has appealed against my judgment (in Civil Appeal No. 6 of 2018), I now set out the grounds for my decision. These grounds of decision should be read in conjunction with this court’s earlier decision dated 8 June 2016 in Mann Holdings Pte Ltd v Ung Yoke Hong [2016] SGHC 112 (“the stay decision”), which related to the defendant’s unsuccessful application for a stay of proceedings on the ground of forum non conveniens. The defendant’s appeal against the dismissal of his stay application was subsequently dismissed by the Court of Appeal.

The facts

The first plaintiff is a Singapore investment company. Tan Poh Hua (‘Sam Tan”) is its director and was the person who incorporated the company. One of the first plaintiff’s investments is a Singapore company called Enviro Investments Pte Ltd (“Enviro”). Chew is a Singaporean and is also an investor in Enviro. Enviro is a wholly-owned subsidiary of a Singapore-listed company called Enviro-Hub Holdings Ltd (“Enviro-Hub”). Enviro-Hub’s business includes recycling of plastics, ferrous and non-ferrous metals, recovery and refining of platinum group metals as well as conversion of waste plastics to fuel. Ng Ah Hua (“Raymond”) is the executive chairman of Enviro-Hub and is also a substantial shareholder of the company.

The defendant is a Malaysian citizen who (together with his wife Chong Siew Choo (“Chong”)) holds 97% of the issued shares in a Malaysian company called Metahub Industries Sdn Bhd (“Metahub”). He is also Metahub’s managing director. Metahub is in the business of recycling, waste management, tin refining and manufacturing.

Around October 2014, the defendant’s brother Ung Yoke Hooi (“William”), who had known Raymond for about 30 years as a friend and business associate, contacted Raymond to tell him that the shareholders of Metahub were looking for a third party to acquire their entire 100% shareholdings in the company.1 Enviro’s shareholders (including the plaintiffs) commenced negotiations in or about November 2014 for the buy-out of all the shares in Metahub from its shareholders as they saw synergy in the recycling and waste management activities of the two companies. The key persons from Enviro who negotiated with the defendant on its intended purchase were Raymond and William. It was William who first introduced Raymond to the defendant some 20 years earlier.

Negotiations on behalf of Metahub were conducted by the defendant and Kevin Chee Ho Chun (“Chee”), who is a director and 1% shareholder of the company. There was a preliminary meeting between the parties on 18 November 2014 followed by two other meetings on 12 December 2014 and 14 January 2015. Negotiations between the parties continued until March 2015. Apparently Chee is legally trained as he drafted the initial sale and purchase agreement (“SPA”) for the parties as well as its numerous amended versions.

It was contemplated that should Enviro acquire Metahub, the first plaintiff and Chew would each own 20% of Metahub’s shares while William would hold 9% of the shares. In his affidavit of evidence-in-chief (“AEIC”) Raymond deposed that it was his condition that William must be involved in the acquisition if Enviro took over Metahub.2

The plaintiffs contended that from the outset, they had made it clear to the defendant and Chee that neither Enviro nor Enviro-Hub were in a position to pay any deposit or make an advance payment for the proposed acquisition unless certain conditions precedent were fulfilled by Metahub, including the completion of the due diligence process by the purchasers.3

The defendant however was adamant from the start of negotiations that either Enviro or Enviro-Hub must pay a deposit before he would allow a due diligence exercise to be carried out. Consequently, negotiations came to a deadlock and the impasse continued until December 2014.

Raymond deposed that on or around 16 December 2014, he was on holiday in Barcelona, Spain when Chee telephoned him pressing him to agree to Chee’s version of the draft SPA that had been emailed to Enviro on 12 December 2014, as well as to pay the initial deposit of RM5m stated in the draft. Raymond deposed he was so put off by Chee’s telephone call that he told Chee he was calling off the proposed acquisition by Enviro.4 The defendant subsequently telephoned Raymond to ask him to reconsider his decision to call off the acquisition.5

On Raymond’s return to Singapore on or around 21 December 2014, William spoke to Raymond and apparently told him the defendant was facing cash-flow problems and that the defendant needed some short-term loans to tide him over. William added that if his brother’s problem could be resolved, the defendant would allow Enviro or Enviro-Hub to carry out the due diligence process on Metahub.

In the same month, Raymond arranged a meeting in Johor between the defendant, Sam Tan and Chew (who is a close friend of Raymond). In that meeting and at subsequent discussions, the plaintiffs claimed (but which the defendant denied) that the defendant confirmed his cash-flow problems and the fact that he needed a loan of RM5m which he represented that he would be able to repay in full after a few months.

The plaintiffs eventually agreed to extend a loan of RM4m (“the loan”) while William would separately extend a loan of RM1m, to the defendant. Raymond instructed solicitors to draft a loan agreement for the plaintiffs’ loan of RM4m.

The first draft of the loan document was prepared around 31 December 2014. The agreement itself was executed on or about 2 January 2015 (“the loan agreement”) by the defendant at Legoland theme park in Johor Bahru in the presence of Raymond and William (who witnessed the defendant’s signature).

On or about 6 January 2015, Sam Tan and Chew signed the loan agreement in Singapore on behalf of the plaintiffs. Amongst the salient provisions in the loan agreement are the following:6 Clause 1.2 – the loan was to be repaid in full within two months or upon completion of the acquisition of shares in Metahub whichever was the earlier; Clause 1.3 – in the event the acquisition of shares was terminated, the loan would be repaid in full immediately; and Clause 2 – the defendant would charge 20% of the shares he held in Metahub to the plaintiffs as security for the loan.

On 6 January 2015, Chew on behalf of himself and the first plaintiff remitted the loan to the defendant’s Malaysian bank account via telegraphic transfer. The defendant executed transfer forms in blank to charge 20% of his shares in Metahub to the plaintiffs. The transfer documents are currently in the custody of the Chief Financial Officer of Enviro-Hub Ms Tan Lay Mai (“Ms Tan”). Sam Tan subsequently forwarded a soft copy of the loan agreement to the defendant by email on 23 January 2015 at the defendant’s request.

According to the plaintiffs (but denied by William), Chew on behalf of William remitted RM1m to the defendant on or about 22 January 2015.

The proposed acquisition of Metahub’s shares was subsequently aborted on or around 26 March 2015, apparently due to Enviro’s inability to procure the requisite financing from either Malaysian or Singapore banks. By an email dated 27 March 2015, Sam Tan demanded repayment of the loan from the defendant.7

The defendant refused to repay, contending that the loan was a non-refundable deposit for the intended acquisition of shares in Metahub and not a loan. He further ignored the letters of demand sent to him by the plaintiffs’ and William’s solicitors in April and May 2015 respectively. Instead, the defendant deposed in his second affidavit that the plaintiffs’ solicitors had no authority from William to send him the second letter of demand dated 6 May 2015 (for RM1m) and his solicitors had written to the plaintiffs’ solicitors on or about 16 September 2015 to demand an explanation. The defendant claimed he had checked with William and was told that the plaintiffs’ solicitors had not been authorised to act for William.

The defendant produced a statutory declaration from William dated 21 October 2015 wherein William declared that: (i) he had never provided Chew with money to be remitted to the defendant as a loan; (ii) that the defendant signed the loan agreement in his presence only as an acknowledgment of the requisite deposit under the SPA for the Metahub shares, as the SPA itself could only be signed after the due diligence exercise had been conducted and (iii) he was present at all the meetings between the parties and the subject of a loan to the defendant was never mentioned at all.8

The plaintiffs filed their writ of summons and statement of claim in this Suit on 19 June 2015 claiming repayment of the loan pursuant to cl 1.3 of the loan agreement (at [15] above) which they alleged the defendant had breached.

As alluded to earlier in [2], the defendant unsuccessfully applied for a stay of proceedings in this Suit. When he failed in his application before this court and the Court of Appeal, he and his fellow shareholders in Metahub commenced proceedings in the Malaysian (Johor Bahru) High Court against the plaintiffs as well as against William, for their failure to complete their purchase despite the fact that the transaction was aborted and no SPA had been executed.

The evidence

The plaintiffs’ evidence in support of their claim was adduced from four...

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