Ng Lim Lee (as administratrix and trustee of the estate of Lee Ker Min, deceased) v Lee Gin Hong (as executor and trustee of the estate of Ng Ang Chum, deceased) and another

• Judge: Steven Chong JCA
• Judgment Date: 21 June 2022
• Neutral Citation: [2022] SGCA 47
• Citation: [2022] SGCA 47
• Court: Court of Appeal (Singapore)
• Published date: 24 June 2022
• Docket Number: Civil Appeal No 142 of 2020
• Plaintiff Counsel: Shobna Chandran, Muhammad Taufiq bin Suraidi and Thaddaeus Aaron Tan Yong Zhong (Tan Rajah & Cheah)
• Defendant Counsel: Harish Kumar s/o Champaklal and Marissa Zhao Yunan (Rajah & Tann Singapore LLP)
• Subject Matter: Partnership,Partners inter se,Accounts,Sharing of profits and losses
• Hearing Date: 11 April 2022

Steven Chong JCA (delivering the judgment of the court):

In life, there will be situations when it is prudent to “let sleeping dogs lie”. The conventional wisdom of this age-old adage is best exemplified by the facts and eventual outcome of this unfortunate litigation.

This appeal concerned an action which was commenced by the litigation representative of the appellant (and later maintained by his estate after his passing) against the estate of his late mother for half of the liability due and owing under an overdraft facility which was extended to their partnership. Both the appellant and his late mother were equal partners of a business which was started by the appellant’s late father (“the Partnership”). The appellant’s action for half of the liability due under the overdraft facility was undoubtedly predicated on both partners being equal partners and hence entitled to an equal share of both the assets and liabilities of the Partnership. However, the appellant failed to recognise that such an action can cut both ways in that his late mother’s estate would be entitled to half of the assets of the Partnership. In response to the appellant’s action, the late mother’s estate brought a counterclaim against the appellant for half of the assets of the Partnership.

As it turned out at the trial, the High Court judge (“Judge”) found that the appellant had treated the partnership moneys as “his own piggy bank” and had overdrawn sums which far exceeded the amount due under the overdraft facility. The Judge dismissed the appellant’s claim in light of her finding that the Partnership was solvent and the appellant’s withdrawals (which were made without the knowledge and consent of his late mother) exceeded his half share and the sums due under the overdraft facility. Consequently, the counterclaim was allowed.

The executors of the late mother’s estate who were aware of the appellant’s withdrawals were quite prepared to “let sleeping dogs lie”. Notwithstanding the fact that the executors had pleaded that the appellant had withdrawn moneys from the partnership accounts for, inter alia, his own real estate purchases and for investments in businesses unrelated to the Partnership, notably, the appellant did not plead that his withdrawals for his personal use were made with the knowledge and consent of his late mother.

The appellant could hardly complain that the “sleeping dogs” awoken by his own misguided action could not be persuaded to return to their slumber. The Judge’s decision in allowing the counterclaim was therefore a direct consequence of the appellant’s action.

Material background facts

The background facts have been comprehensively set out in the judgment below (“the Judgment”). We will therefore only highlight the salient facts pertinent to the appeal.

The parties

The appellant and the respondents are siblings. Through his eldest son and litigation representative Lee Kai Teck Roland (“Roland”), the appellant sued his eldest sister Lee Gin Hong (“the first respondent”) and youngest sister Lee Gim Moi (“the second respondent”) to recover half of the Partnership’s liability under an overdraft facility. The respondents are sued personally as well as in their capacities as the executors of the estate of their late mother Ng Ang Chum (“the late mother”) who passed away in December 2014.

The appellant was incapacitated by a severe stroke in July 2014 and Roland became his litigation representative in February 2016. Shortly before the appeal was scheduled to be heard in March 2021, the appellant passed away. The appeal was adjourned, and an application was later made (and granted) at the hearing to change the appellant’s name to reflect his wife as the administratrix and trustee of his estate.

Background to the dispute

The Partnership first commenced business as a sole proprietorship by the appellant’s late father in 1958. The Partnership was a retailer of motorcycles, motor scooters, spare parts and accessories. It also operated a workshop. The appellant subsequently joined the business as a partner in 1975. After his father’s death in 1981, the appellant’s late mother was registered as a partner.

The respondents started working for the Partnership in the 1980s as administration clerks until they resigned in August 2016. They lived with their late mother at No 75 Chua Chu Kang Road (“75 CCK”) for over 30 years until her passing. The respondents’ late mother bequeathed 75 CCK to them in her will.

In or around 1994, the appellant decided to set up LH Motor Pte Ltd (“LHMPL”), in which he held 70% of the shares while his late mother and the respondents held 10% of the shares each. The Partnership’s business in the sale and purchase of new motorcycles was then moved to LHMPL. The appellant used the Partnership’s moneys for the initial capital investment in LHMPL and when LHMPL made sales, the money was either collected directly by the Partnership, or repaid by LHMPL to the Partnership.

The parties disputed the details of how the Partnership was managed. According to the respondents, their late mother was illiterate, and the business of the Partnership was conducted and managed by the appellant. Their late mother had no say in the management or running of the business, and apart from performing simple tasks such as sweeping the floor, cooking and making beverages, she took no part in the Partnership’s business. The appellant also did not share the profits of the Partnership and only gave his late mother a monthly allowance of about $1,000. After the appellant was incapacitated, his second son Lee Kai Leong Jeffrey (“Jeffrey”) managed the Partnership.

The appellant did not admit that his late mother was illiterate. Instead, his position was that she was a savvy businesswoman who was smart and well versed with every aspect of the Partnership, of which she was a cheque signatory. She would handle the cashier’s machine, collect payments from customers and gave them change as well as make payment to vendors. The appellant’s late mother took part in the management of the Partnership and the appellant therefore did not manage the Partnership solely. In fact, after the appellant’s incapacitation in July 2014, his late mother retained control of the Partnership while the respondents, from whom Jeffrey took instructions, ran the entire business.

After the appellant’s mother passed away, the appellant, through Roland sued the respondents for half of the liability due and owing under an overdraft facility of $1.5m extended to the Partnership by United Overseas Bank (“the UOB overdraft facility”) in 2018. The respondents counterclaimed against the appellant, alleging that he withdrew moneys from the UOB overdraft facility and other bank accounts of the Partnership for, inter alia, his own real estate purchases and for investments in businesses unrelated to the Partnership. They also contended that the appellant was liable to account for private profits he withdrew from the Partnership. The parties’ respective cases will be set out in greater detail below.

The respondents, as part of their counterclaim, alleged that the appellant had withdrawn the following sums for his personal use:

Category	Partnership moneys used by the appellant (S$)
The purchase of a property at Blk 223 Choa Chu Kang (“Blk 223 CCK”)	123,999.50
The construction of two semi-detached houses at 59 and 59A Choa Chu Kang (59A CCK”)	890,253.82
The purchase of a property at 615 Balestier Road (“615 Balestier Rd”)	605,131.50
The investment in Everfit Motor Pte Ltd (“Everfit”)	46,910.00
The investment in Bikelink Pte Ltd (“Bikelink”)	88,000.00
The investment in Cycle Trade Enterprise (“Cycle Trade”)	103,531.31
The investment in Arrow Speed Auto Services (“Arrow Speed”)	5,000.00
The investment in a property at 34 Norris Road (“34 Norris Rd”)	294,627.73
The purchase of vehicles for his own use (“Cars”)	126,974.37
Personal and family expenses (“Family”)	222,614.35
Others	92,500.00
Total	2,599,542.58

The above sums are the aggregate of various transactions detailed in Annexures A and B to the Defence and Counterclaim, as well as various withdrawals by the appellant detailed in Appendix 21 of the report of the appellant’s expert, Tee Wey Lih (“Tee” and “Tee’s report”).

It was not disputed that the appellant withdrew moneys from the Partnership for purposes unrelated to the Partnership. The appellant’s response to the counterclaim was essentially that the withdrawals were approved by his late mother and/or he had deposited more moneys into the Partnership’s accounts than he had withdrawn. His expert, Tee, accepted the accuracy of the items listed in Annexures A and B. However, his position was that withdrawals prior to 2002 need not be taken into account. This will be explained in greater detail below at [23].

The parties’ cases below The appellant’s case below The claim

The appellant’s claim in essence was that his late mother, as an equal partner, should bear half of the liability of the Partnership. In the Statement of Claim, the appellant asserted that the Partnership was insolvent as of the date of dissolution in December 2014 (“Date of Dissolution”), when his late mother passed away. Relying on Tee’s report, the appellant argued that the Partnership had a net liability of $710,214 due and owing under the UOB overdraft facility as well as interest. His late mother was responsible for half of that sum as she was an equal partner of the Partnership.

He further alleged that the respondents had acted in bad faith in administering the estate of their late mother in breach of trust without regard for the debts of the Partnership when they were aware of the UOB overdraft facility. They should therefore be personally liable for their late mother’s share of the...