Ng Chee Weng v Lim Jit Ming Bryan and another

• Jurisdiction: Singapore
• Judge: Kan Ting Chiu J
• Judgment Date: 16 May 2011
• Neutral Citation: [2011] SGHC 120
• Court: High Court (Singapore)
• Docket Number: Suit No. 453 of 2009/F (Registrar’s Appeal No.379 of 2010/D)
• Year: 2011
• Published date: 20 May 2011
• Hearing Date: 15 October 2010
• Plaintiff Counsel: Tan Cheng Han SC (instructed) and Vijay Kumar (Vijay & Co)
• Defendant Counsel: Cavinder Bull SC, Woo Shu Yan and Lin Shumin (Drew & Napier LLC)
• Subject Matter: Civil Procedure,Pleadings
• Citation: [2011] SGHC 120

Kan Ting Chiu J:

The plaintiff Ng Chee Weng applied to amend his Statement of Claim against the defendants. Some of the amendments were dismissed by an Assistant Registrar (“AR”), and the plaintiff appealed against the dismissal. I affirmed the AR’s decision and set out my grounds.

Background

On 26 May 2009, when the plaintiff commenced the action against the defendants, he set out the basis of his claim in para 1 of the Statement of Claim:

The Plaintiff was the beneficial owner of 50% of the shareholding in Sinco Technologies Pte Ltd (the “Company”) which was held in trust for the Plaintiff by the 1st Defendant up to April 2007. The Plaintiff was therefore entitled to dividend payments made whilst he was the beneficial owner of the 50% shareholding interests in the Company.

The Statement of Claim went on to state that the plaintiff had sold his shares in the company to the first defendant: 17. On or about late April or May 2007, the 1st Defendant approached the Plaintiff inquiring if the Plaintiff was interested in selling all his 50% shareholding in the Company to the 1st Defendant. The 1st Defendant offered to purchase all of the Plaintiff’s shareholding in the Company. But, the 1st Defendant suppressed the material fact that indeed substantial dividend payments were previously made, in particular, between the period 2003 and 2007. 18. The Plaintiff agreed to sell his 50% shareholding in the Company to the 1st Defendant at the price of $5,000,000.00. The Plaintiff – at that time – had no inkling that dividend payments were previously paid out by the Company.

The plaintiff’s complaint was that the first defendant had not accounted for and paid over to him dividend payments the company paid in respect to his shares prior to the sale. He alleged that: 28. Given that the 1st Defendant holds 50% shareholding in the Company in trust for the Plaintiff between the period of 2003 and 2007, the Plaintiff was beneficially entitled to payment of dividends of $12,015,000.00 (being 50% of dividend payments of the Company of $24,030,000.00 for the period from 2003 to 2007). However, there was a prior agreement between the Plaintiff and the 1st Defendant that 5% out of the 50% of the Plaintiff’s beneficial entitlement to the dividend payments of the Company would be paid to the 1st Defendant. Accordingly, the Plaintiff’s rightful 45% share of the dividend payments for the period 2003 to 2006 amounts to $8,880,916.67.

The plaintiff concluded the Statement of Claim with a claim for the dividends of $8,880,916.67.

The negotiations

Besides his entitlement to the dividends, the Statement of Claim also alluded to discussions between the plaintiff and the first defendant. References were made to them in several parts of the Statement of Claim, mainly in: 29. Between the period from March 2009 and April 2009, the Plaintiff had various meetings and/or telephone conversations with the 1st Defendant [in the presence of or through one Roy] during which the 1st Defendant: (1) did not deny that he was holding the 45% shareholding of the Company in trust for the Plaintiff; (2) did not deny that the Plaintiff was entitled to dividend payments of the Company, the shares of which was held in trust for the Plaintiff by the 1st Defendant; and (3) offered, first $3,500,000.00 [at the meeting on 23 March 2009] and then $4,500,000 [at the meeting on 31 March 2009] to the Plaintiff in settlement of the dividend payments which the Plaintiff was beneficially entitled to. 30. The particulars of the relevant meetings and/or telephone conversations between the parties are set out as follows: (1) ... (2) ... (3) ... [At a meeting on 31 March 2009] [t]he 1st Defendant then offered the Plaintiff $4,500,000.00. The Plaintiff decided to accept this given his long-standing friendship with the 1st Defendant. (4) 15 April 2009 telephone conversation between the Plaintiff [through Roy Ng] and the 1st Defendant – Roy Ng, on the Plaintiff’s behalf, called the 1st Defendant on the telephone and informed him of the Plaintiff’s decision to reject the $4,500,000.00 offer and the Plaintiff’s counter-proposal of $6,500,000.00 as a global sum for the settlement of his share of the dividend payments. However, the 1st Defendant rejected the Plaintiff’s proposal; and.. Although the plaintiff referred to the discussions, he stopped short of alleging that there was a concluded agreement.

The striking-out application

The defendants applied to strike out parts of the Statement of Claim including the parts quoted in the foregoing paragraph on the ground that they referred to “without prejudice” communications, which were privileged from disclosure. The plaintiff resisted the application and contended that the negotiations were not carried out on a “without prejudice” basis.

The application came on for hearing before Justice Belinda Ang Saw Ean, who granted the application and struck out the paragraphs in question. The plaintiff was not satisfied with her decision and brought an appeal to the Court of Appeal.

In the course of the arguments before the Court of Appeal, the plaintiff put forward amendments to the Statement of Claim to plead a claim to enforce a settlement agreement as an alternative claim to the claim for the dividends. (I refer to these amendments, which were not incorporated into any application for amendment, as the proposed amendments.) The essence of the amendments is in [33] of the proposal:

On 31 March 2009 the Plaintiff and the 1st Defendant entered into another oral Settlement Agreement under which agreement the 1st Defendant agreed to pay the Plaintiff S$4.5 million in discharge of the 1st Defendant’s liability as trustee to account for dividends declared and paid by the Company to the 1st Defendant for the period 2003-2007, ....

[emphasis added]

The critical change was that the settlement negotiations became an agreement to settle at $4.5m.

The defendants objected to the proposed amendments on the ground that if they were allowed, the plaintiff’s case would be that there was a concluded settlement agreement, and the plaintiff cannot have a claim for the dividends anymore. The argument found favour with the Court, which disapproved the proposed amendments and dismissed the plaintiff’s appeal.

However, the Court of Appeal went on to issue an Addendum to its order that:

The dismissal of the appeal should not be taken as precluding the appellant from applying for leave to make such further amendments to his statement of claim as he may deem fit, subject always to the right of the respondent to object to the same in accordance with general principles. However, any proposed amendment which is in the precise form and sequence as set out in the draft enclosed in the appellant’s submission to this court on 18 May 2010 should not be allowed as we have already ruled that that draft was not in order.

Whether any “without prejudice” evidence (“the contested evidence”) may be permitted to be adduced in the proceedings would have to be determined in accordance with the general law and in the light of any future amendments to pleading (if any) as may be allowed. For the avoidance of doubt we should state that the dismissal of the appeal does not mean that we have ruled that the contested evidence is inadmissible under any circumstances. We have only determined that the contested evidence is inadmissible on the basis of the existing pleadings.

The application to amend

The plaintiff took heed of the Addendum and applied in Summons No. 3969 of 2010 (“SUM 3969/2010”) to amend the Statement of Claim. The main amendments (I refer to the amendments in the application as the draft amendments) are: 30. The Plaintiff’s primary case is that those negotiations culminated in a binding oral agreement between himself and the 1st Defendant, which was made on 31 March 2009 ... by which it was agreed that the 1st Defendant would pay the Plaintiff the sum of $4,500,000 in full and final settlement of his claim in respect of the dividends. ...

Particulars a. ... b. ... c. ... d. ... e. ... f. The 1st Defendant asked the Plaintiff why he had turned down his offer of $3.5 million and the Plaintiff said that he was entitled to much more than that. He gave the 1st Defendant the same explanation as he had given to Roy Ng. Initially the 1st Defendant did not react to this, and discussions turned to other matters. However, towards the end of the meeting Roy Ng proposed to the 1st Defendant that he should settle with the Plaintiff by paying “what is rightfully due to [the Plaintiff]”. The 1st Defendant made an offer to pay $4.5 million which the Plaintiff verbally accepted then and there. [emphasis...