Ng Chee Weng v Lim Jit Ming Bryan and another

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 16 April 2014
• Neutral Citation: [2014] SGHC 77
• Court: High Court (Singapore)
• Hearing Date: 08 March 2013,06 March 2013,07 March 2013
• Docket Number: Suit No 453 of 2009
• Plaintiff Counsel: Geraldine Andrews, Q.C. and Vijay Kumar (Vijay and Co.)
• Defendant Counsel: Cavinder Bull, S.C., Woo Shu Yan and Lin Shumin (Drew & Napier LLC)
• Subject Matter: Contract,Formation,Whether there was a binding settlement agreement,Repudiation,Whether plaintiff repudiated the settlement agreement,Trusts,True beneficial ownership
• Published date: 30 April 2014

Judith Prakash J: Introduction

In November 1995, Mr Ng Chee Weng, the plaintiff in this law suit, became one of the founding shareholders of a company called SinCo Technologies Pte Ltd (“SinCo”). The plaintiff held his shares on trust for his friend, Mr Bryan Lim Jit Ming, (“Mr Lim”), because SinCo had been set up to provide a vehicle for a new business to be undertaken by Mr Lim. In later years, the plaintiff also acquired shares for himself. At all times Mr Lim was the man in charge of SinCo and he built it up into a dynamic and successful business. The plaintiff remained a shareholder on the books until 2002 when he transferred all his shares to Mr Lim. He remained a director until 2005.

In 2009, the plaintiff approached Mr Lim and asked for payment of his share of the dividends declared by SinCo during the financial years from 2003 until and including 2006. The plaintiff claimed that the share transfer form he had executed in 2002 was only a paper transfer. It was not till 2007 that he had actually sold his shares to Mr Lim. Rather, between 2002 and 2007 Mr Lim had held those shares on trust for the plaintiff. Thus Mr Lim was liable to account to the plaintiff for dividends declared and paid during the material period. Discussions were held and Mr Lim made the plaintiff various offers to settle the claim. According to the plaintiff, on 31 March 2009, he agreed to accept $4.5m in full settlement of his dividend claim.

This action was started in May 2009, principally against Mr Lim. The second defendant is the wife of Mr Lim. She took no part in the business of SinCo and did not participate in any discussions with the plaintiff. She has only been sued on the basis that if she has received any part of the dividends which the plaintiff claims, she would be under a duty to account for the same to the plaintiff.

Mr Lim’s position is that he purchased the plaintiff’s shares in 2002. The shares belonged entirely to him thereafter; there was no trust. Therefore, the plaintiff was not entitled to any dividends paid after that date. Secondly, Mr Lim says that there was no concluded settlement agreement between him and the plaintiff. Alternatively, even if there was, the plaintiff repudiated this agreement and Mr Lim accepted the repudiation.

Initially, the plaintiff sued for the dividends in full. The claim did not mention the settlement agreement. This was amended subsequently. As the plaintiff’s claim now stands, the settlement agreement is its main plank. The plaintiff emphasises that he is entitled to receive $4.5m under the settlement agreement. The plaintiff’s alternative cause of action, which arises only if it is found that there is no binding settlement, is that Mr Lim holds dividends amounting to $11,414,250 on constructive trust for the plaintiff and is obliged to pay them to the plaintiff.

There are numerous disputes of fact but the two main issues can be stated briefly. They are: Did the plaintiff and Mr Lim conclude a binding settlement agreement on 31 March 2009 under which Mr Lim was to pay the plaintiff $4.5m and if so, was this agreement later repudiated? Did Mr Lim buy all the plaintiff’s shares in 2002 or were these shares transferred to Mr Lim on trust and held on trust until the actual sale took place in 2007?

In the discussion that follows, I will refer to the first defendant either as such or as “Mr Lim”. As for the plaintiff, I will continue to use that nomenclature as there are too many Ngs involved in this case.

The first main issue: Was there a binding settlement agreement on 31 March 2009?

Both parties are agreed that on 31 March 2009, they met, together with a mutual friend, Mr Roy Ng, to discuss the plaintiff’s dividend claims. During the discussion, Mr Lim offered to pay the plaintiff $4.5m in full settlement of his claim. The plaintiff and Roy Ng say that the plaintiff accepted the offer immediately. Mr Lim, however, maintains that the plaintiff did not accept it. No document was signed to evidence this alleged agreement. What I have to decide is thus whether I accept the plaintiff’s version or Mr Lim’s version as being the truth.

The plaintiff’s version

The plaintiff and Mr Lim first met in 1985. They became good friends and did some business together. In 1995, Mr Lim asked the plaintiff to help him set up a new company. The plaintiff agreed and SinCo was incorporated in November 1995. The plaintiff was one of the subscribers and held his share on trust for Mr Lim. The other subscriber share was held by one Shirley Quek Pey Sung (“Quek Pey Sun”) on trust for her husband, Terence Ng Chee Khoon (“Terence Ng”). Terence Ng was one of the key people working with Mr Lim in SinCo. From the beginning, the plaintiff did not play an active part in the running of SinCo. Mr Lim was in control of the company and he made all the decisions.

In the years that followed, the plaintiff became a substantial shareholder in the company and also lent money to others, including Mr Lim, to acquire shares in it. In 2002, the plaintiff transferred all his 112,500 shares in SinCo to Mr Lim. The plaintiff said that this was not a sale but that Mr Lim held the shares on trust for him until 2007 when an actual sale took place.

In relation to the settlement, the plaintiff’s version of how this came about was as follows.

In early March 2009, Terence Ng, who was still a shareholder of SinCo, visited the plaintiff. He told the plaintiff that he was having a dispute with Mr Lim over the management of the company. In the course of the discussion that followed, Terence Ng said that dividend payments made by SinCo between 2003 and 2006 amounted to more than $5m. The plaintiff was surprised: he had not received a single cent in dividends. Terence Ng in turn was surprised that the plaintiff had disposed of his shareholding to Mr Lim in 2007 without offering him the chance to acquire any part of the same. Terence Ng wanted to confront Mr Lim regarding his purchase of the plaintiff’s shares.

On 16 March 2009, the plaintiff met Mr Lim. He warned Mr Lim that Terence Ng had found out about the sale of the plaintiff’s shares and had indicated that he was going to commence legal proceedings against Mr Lim. The plaintiff did not raise the topic of the dividends at that meeting.

The next day, the plaintiff had another discussion with Terence Ng. He was given details of the dividends declared and paid for the financial years 2003 up to 2006. These apparently amounted to $11,660,000. The plaintiff was upset that the dividends were so high and yet he had not been paid anything. Subsequently, it turned out that the figures that Terence Ng had given him were incorrect and the actual dividends paid amounted to slightly over $24m.

On 18 March 2009, the plaintiff and Terence Ng met Mr Lim. They discussed the dividends and why Terence Ng had not been given the chance to purchase the plaintiff’s shares in SinCo. The plaintiff also asked Mr Lim why he had cheated him of his dividend payments. Mr Lim did not comment or say that the plaintiff was not entitled to any dividends. Nor did he assert that the plaintiff had sold him the shares in 2002. The plaintiff asked Mr Lim to compensate him for the amount due. Mr Lim’s response was simply to say that he would get back to the plaintiff.

By 23 March 2009, the plaintiff had not received a response from Mr Lim on the subject of the dividends. He then decided to enlist the assistance of Roy Ng. He visited Roy Ng at the latter’s office and complained that Mr Lim had withheld his dividends. Roy Ng called Mr Lim to convey this complaint and shortly thereafter, Mr Lim arrived at Roy Ng’s office. Roy Ng told Mr Lim that the plaintiff had said that dividends had been declared for the period 2003 – 2006 and that the amount of dividends paid out was about $11.66m. Mr Lim did not contradict this statement. Roy Ng also said that the plaintiff had worked out that his share of dividends was around $5.427m. Mr Lim said nothing. He did not ask how the dividends had been calculated.

The three men then went out for lunch together. After lunch, Mr Lim told the plaintiff that a large amount of the dividend payment had been used to pay a commission to one of SinCo’s clients. He offered to pay the plaintiff $3.5m to settle his claim for dividends, implying that this was the plaintiff’s share of what was left after the commission payment. The plaintiff accepted that offer straightaway.

About a week later, the plaintiff had second thoughts. He spoke to Terence Ng and found out that commission had not been paid out of the dividends. Thus, the plaintiff thought that he was entitled to much more than $3.5m. At some point, the plaintiff did a computation and came up with the figure of $5.4m. On 31 March, he told Roy Ng that he was turning down Mr Lim’s settlement offer. Roy Ng conveyed this to Mr Lim and the three men then had another meeting. Towards the end of the meeting, Mr Lim offered the plaintiff $4.5m. The plaintiff said that he accepted this offer then and there. The plaintiff wanted this agreement committed to writing but Mr Lim was not agreeable. He said that there was no need to put the agreement into writing because Roy Ng was a witness to it. He proposed that all payments be made in cash and to Roy Ng as the witness.

On 14 April 2009, the plaintiff received the message from Roy Ng that Mr Lim was ready to make a partial payment. On 15 April 2009, however, the plaintiff sent a text message (“SMS”) to Roy Ng instructing him to tell Mr Lim that he was rejecting the $4.5m offer. He said

“Good morning roy, pls let Bryan know that I am rejecting his offer of 4.5m. I accepted because of friendship but as more infors (sic) given to me I feel he had done me a lot of things against me. Likely leave a lawyer to advice me unless he can come out proposal acceptable. Sori to trouble you. Thanks”

The plaintiff then called Roy Ng and told...