Ng Chee Weng v Lim Jit Ming Bryan and another and another appeal

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 12 March 2015
• Neutral Citation: [2015] SGCA 13
• Plaintiff Counsel: Richard Lester Millett QC, Narayanan Vijya Kumar and Niroze Idroos (Vijay & Co)
• Docket Number: Civil Appeals Nos 77 and 79 of 2014
• Date: 12 March 2015
• Hearing Date: 13 October 2014
• Subject Matter: True beneficial ownership,Formation,Contract,Whether there was a binding settlement agreement,Repudiation,Whether plaintiff repudiated the settlement agreement,Trusts
• Year: 2015
• Citation: [2015] SGCA 13
• Defendant Counsel: Cavinder Bull SC, Woo Shu Yan, Lin Shumin, Vikram Raja Rajaram and Tan Yuan Kheng (Drew & Napier LLC)
• Court: Court of Appeal (Singapore)
• Published date: 13 March 2015

Andrew Phang Boon Leong JA (delivering the judgment of the court): Introduction

Notwithstanding the apparent simplicity of the issues before this court, the application of the law to the facts is an intensely problematic one. This is due in no small measure to the fact that the respective cases advanced by both parties to the present appeals were rife with difficulties and improbabilities. As we shall see, the resolution of the appeals turns, in the final analysis, on whose account was less improbable.

By way of a very broad overview, the plaintiff brought a claim against the defendants for the recovery of dividends that were declared and paid out by a company on two alternative grounds. For all intents and purposes, the claim was brought principally against the first defendant (the second defendant being the wife of the first defendant who was not involved in the business of the company and was sued merely on the basis that, if she had received any part of the dividends concerned, she would be under a duty to account for the same to the plaintiff). The first ground of claim was premised on an alleged settlement agreement entered into between the plaintiff and the first defendant. The second was premised on the argument that the first defendant held the shares concerned on trust for the plaintiff and was therefore liable to account to the plaintiff for the dividends declared and paid during the period covering the financial years from 2003 until and including 2006 (“the material period”). Not surprisingly, the defendants argued that there had been no settlement agreement entered into between the plaintiff and the first defendant, and that, as the plaintiff had sold the shares to the first defendant before the material period mentioned, the plaintiff was not entitled to the dividends declared and paid during that period.

The trial judge (“the Judge”) held in favour of the defendants on both grounds and therefore dismissed the plaintiff’s claim (see Ng Chee Weng v Lim Jit Ming Bryan and another [2014] SGHC 77 (“the Judgment”)). The Judge held that, whilst the plaintiff and the first defendant had in fact entered into a binding settlement agreement, the plaintiff had nevertheless repudiated that agreement, which repudiation had been accepted by the first defendant. The Judge also held that the plaintiff had not discharged the burden of proving that the shares in question were sold to the first defendant in 2007; thus the plaintiff was not entitled to the dividends declared and paid during the material period.

The plaintiff appealed against the whole of the Judgment in Civil Appeal No 77 of 2014 (“CA 77/2014”), whilst the defendants appealed against only that part of the Judgment which held that the plaintiff and the first defendant had entered into a settlement agreement in Civil Appeal No 79 of 2014 (“CA 79/2014”). For ease of reference in the context of this judgment, we will refer to the respective parties as above (ie, as “the plaintiff” and “the first defendant” (and, collectively, with respect to the first defendant and his wife, the second defendant, as “the defendants”)).

We pause to note that, although the Judge dealt with the issue as to whether or not there was a settlement agreement between the parties first, it might have perhaps been preferable to consider the issue as to whether or not the first defendant held the relevant shares on trust for the plaintiff first. The order in which the Judge approached the issues is probably due to the fact that the plaintiff had placed the issue concerning the settlement agreement at the forefront of his claim against the defendants. But this is, in the final analysis, of little moment and we will proceed to consider both these issues in the order in which they were considered by the Judge in the court below.

So much by way of a very broad – and brief – overview. We turn now to the specific facts of the case. As alluded to above, a great many of them are controverted and the overall factual matrices relied upon by both the plaintiff and the first defendant (particularly with regard to the issue as to whether or not the first defendant held the relevant shares on trust for the plaintiff) are both less than satisfactory, to say the least. This will, in fact, be evident in the analysis that follows.

The facts The undisputed facts

The plaintiff and the first defendant met in 1985 and became good friends. In 1995, the plaintiff agreed to help the first defendant set up a new company, SinCo Technologies Pte Ltd (“SinCo”). SinCo was incorporated in November 1995 and had two original shareholders: the first defendant and Terence Ng. Both their shares were held on trust for them by the plaintiff and Terence Ng’s wife respectively.

It is undisputed that the first defendant took charge of SinCo and built it up into the dynamic and successful business it is today.

There were a number of changes in the shareholding of SinCo from 1995 to 2000. In or around 2000, the plaintiff held 175,000 shares: 62,500 were held on trust for the first defendant while 112,500 were the plaintiff’s. There were two other shareholders who held 37,500 shares each on trust for their respective husbands, Terence Ng and Perry Ong.

On 15 March 2002, the plaintiff wrote to the company secretary of SinCo and sent a copy of this letter to all the other directors, ie, the first defendant, Terence Ng and Perry Ong. In the letter, the plaintiff stated that he wished to relinquish his entire shareholding of 112,500 shares in SinCo to the highest bidder at a minimum price of $1.2m (which works out to approximately $10.67 per share). He also set out certain conditions which he wanted the buyer of his shares to fulfil. This included terms that the buyer had to ensure that all personal loans made by the plaintiff in relation to SinCo would be returned and that all guarantees given by him would be discharged.

On receipt of the plaintiff’s letter, the company secretary wrote to the other registered shareholders asking them whether they wanted to purchase proportions of the plaintiff’s shares to which they were entitled at $10 per share, or all the shares available at the same price if the other shareholders did not take up their respective proportions. Perry Ong’s nominee was offered 56,250 shares. Perry Ong replied to say he was not interested in purchasing the shares. Terence Ng’s nominee was offered the other 56,250 shares. She did not accept the offer.

Shortly thereafter, the plaintiff signed a share transfer form. The plaintiff said that this transfer form was blank when he signed it. The transfer form that was adduced in evidence showed that the plaintiff transferred 175,000 ordinary shares to the first defendant (“the Shares”) in consideration of the sum of $875,000. The transfer form was dated 17 April 2002. On 17 April 2002, a company resolution was passed approving the transfer of the Shares from the plaintiff to the first defendant. This resolution was signed by the plaintiff, the first defendant and Terence Ng.

The conflicting positions The Settlement issue

A significant amount of time lapsed between the events which took place in 2002 and in 2009 when the plaintiff first began to allege that the Shares were held on trust by the first defendant for him.

The plaintiff first approached the first defendant for his share of the dividends declared and paid between 2003 and 2006 on 18 March 2009. According to the plaintiff, the events leading up to this are as follows. First, he had learnt during a discussion with Terence Ng sometime in early March 2009 that dividend payments made by SinCo between 2003 and 2006 amounted to more than $5m, yet he (the plaintiff) had not received any payment in this regard. Terence Ng, for his part, was also surprised to learn during this discussion that the plaintiff had sold his shares to the first defendant in 2007 without making him an offer; hence Terence Ng wanted to confront the first defendant about the matter. On 16 March 2009, the plaintiff met the first defendant but did not raise the topic of the dividend payments. The plaintiff only told the first defendant that Terence Ng had found out about the sale of his shares in 2007. On 17 March 2009, the plaintiff had another discussion with Terence Ng who now clarified that dividends declared and paid between 2003 and 2006 amounted to a total of $11.66m (although the plaintiff’s then solicitors later found that this sum was slightly over $24m prior to the commencement of these proceedings).

On 18 March 2009, the plaintiff met the first defendant at the latter’s office with Terence Ng. They discussed the payment of dividends that the plaintiff said belonged to him and also why Terence Ng had not been given the chance to purchase the plaintiff’s shares in SinCo. The first defendant did not respond to these claims. According to him, the plaintiff and Terence Ng both spoke fiercely and intimidatingly. He did not understand the basis for their demands or why the plaintiff had suddenly taken Terence Ng’s side and, after a while, told both of them to leave his office which they did.

On 23 March 2009, the plaintiff visited a mutual friend of the two parties, Roy Ng, to enlist his assistance in respect of the dividends claim. Roy Ng called the first defendant who then arrived at Roy Ng’s office. According to the plaintiff, Roy Ng told the first defendant about the plaintiff’s claim for dividends and the first defendant did not say anything to contradict it. The first defendant’s version, however, is that he had responded by saying that he did not owe the plaintiff anything as he had purchased the plaintiff’s shares in 2002.

The three men then went out for lunch where the plaintiff says he was told by the first defendant that part of the dividend payments had been used to pay a commission to one of SinCo’s clients. The first defendant thus offered the plaintiff...