Ong & Company Pte Ltd v Quah Kay Tee

• Jurisdiction: Singapore
• Judgment Date: 09 April 1996
• Date: 09 April 1996
• Docket Number: Suit No 2158 of 1993
• Court: High Court (Singapore)

Ong and Co Pte Ltd

Plaintiff

and

Quah Kay Tee

Defendant

[1996] SGHC 69

Amarjeet Singh JC

Suit No 2158 of 1993

High Court

Civil Procedure–Pleadings–Striking out–Whether proceedings were abuse of process of court–Order 18 r 19 (1) (d) Rules of the Supreme Court (Cap 322, R 5, 1990 Ed)–Evidence–Proof of evidence–Onus of proof–Whether plaintiff had discharged his evidential and legal burden of proof under tortious conspiracy and fraud–Tort–Conspiracy–Intention to injure or defraud–Direct evidence unnecessary–Whether intention could be inferred–Tort–Conspiracy–Intention to injure or defraud–Remedies–Whether conveyance of shares made with intention to defraud could be made void–Statute of 13 Elizabeth 1571 (UK)–Section 73B Conveyancing and Law of Property Act (Cap 61, 1994 Rev Ed)

On 9 September 1992 the plaintiff, Ong and Co Pte Ltd, started an action against Quah Wee Tiong (“Wee Tiong”), a stockbroker it had employed, which it claimed owed it over $1.5 million plus interest. On 15 October 1992, the plaintiff obtained an interim injunction against Wee Tiong restraining him from disposing of his assets and immediately informed Wee Tiong's solicitors David Lim & Partners of the injunction. At that time Wee Tiong's brother Quah Wee Tong (“Wee Tong”) was working as a solicitor at David Lim & Partners. In December 1992 Wee Tiong returned to Singapore from abroad, and on 26 July 1993 judgment was given against him for the sum claimed. The plaintiff then learnt that on 8 December 1992, after the order for interim injunction had been made, 720 shares (“the shares”) in a company known as Soon Aik (Pte) Ltd (“Soon Aik”) had been transferred by Wee Tiong to Quah Kay Tee, the father of Wee Tiong and the defendant in this action. The defendant paid only $10 for all the shares. On 9 November 1993, the plaintiff started the present action against the defendant, claiming that the transfer of the shares to the defendant was the result of a conspiracy to injure the plaintiff who, as creditor of Wee Tiong, would have been entitled to seize the shares to meet its claim and that it had consequently suffered loss. The plaintiff claimed that at the time of the transfer the defendant knew of the injunction from his sons. It sought damages and an order that the transfer of the shares was void. It was also pleaded that the transfer of the shares was void under cl 5 of the Statute of 13 Elizabeth 1571 (UK) (re-enacted in a shortened form as s 73B of the Conveyancing and Law of Property Act (Cap 61, 1994 Rev Ed)) (“the Elizabethan Statute/s 73B, CLPA”), as it had been made in such circumstances that the natural consequence of the transfer was to defraud creditors, or the transfer had been made with the intention to defraud creditors. The defendant denied that anyone had notified him of the interim injunction, or that he had conspired against the plaintiff. He claimed that he had purchased the shares for valuable consideration, as part payment of an earlier loan to Wee Tiong, and in good faith. At the close of the plaintiff's case, defence counsel applied under O 18 r 19 (1) (d) of the Rules of the Supreme Court (Cap 322, R 5, 1990 Ed) for an order to strike out the pleadings on the ground that the proceedings were an abuse of the process of the court, claiming that the plaintiff had failed to provide direct evidence of the defendant's intention to injure or defraud the plaintiff, which he claimed was required both to prove the tort of conspiracy and under the Elizabethan Statute.

Held, allowing the plaintiff's claim:

(1) The defendant's application to strike out the claim was made much too late and had no merit in law or in fact. The plaintiff did not have to plead or prove direct knowledge on the part of the defendant of the interim injunction at or about the time the transfer was made. The application was therefore dismissed: at [17] and [21].

(2) It was not the law of evidence that every step in the allegation of fraud had to be proved by calling live and admissible evidence nor was it the law that fraud could not be inferred in the appropriate case. However, the circumstantial evidence had to be so compelling and convincing that bearing in mind the high standard of proof one was nevertheless satisfied that an inference of fraud was justified: at [17].

(3) The plaintiffs bore both the evidential (or persuasive) and the legal burden in respect of the averments of tortious conspiracy under the common law and fraud under the Elizabethan Statute/s 73B, CLPA. The plaintiff had discharged both the legal and evidential burden on a higher degree of probability: at [19] and [39].

(4) The court drew from the evidence the compelling inference that the defendant did know of the interim injunction, that the defendant and Wee Tiong had conspired to transfer the shares to put them out of the reach of the plaintiff and that this conspiracy had taken place after the interim injunction was obtained. The consideration paid for the shares was not a bona fide consideration. The defendant and Wee Tiong had agreed to injure the plaintiff and cause it economic loss by putting the shares out of its reach and render any judgment useless. Therefore, the court was satisfied in fact and in law that the plaintiff had proved its claim in conspiracy under the common law and under the Elizabethan Statute/s 73B, CLPA: at [39], [41], [42], [43] and [44].

(5) Accordingly, the conveyance of the shares made with the intent to defraud the plaintiff and injure it would be made void under the Elizabethan Statute/s 73B, CLPA: at [45].

Sumitomo Bank Ltd v Thahir Kartika Ratna [1992] 3 SLR (R) 638; [1993] 1 SLR 735 (folld)

Application of English Law Act (Cap 7A, 1994Rev Ed)

Civil Law Act (Cap 43,1988Rev Ed)s 5

Companies Act (Cap 50,1994Rev Ed)s 158

Conveyancing and Law of Property Act (Cap 61, 1994Rev Ed)s 73B (consd);ss 73B (1), 73B (2),73B (3)

Rules of the Supreme Court (Cap 322, R 5, 1990 Ed)O 18r 19 (1) (d) (consd)

Law of Property Act 1925 (c 20) (UK)ss 172 (1),172 (2),172 (3)

Statute of 13 Elizabethan1571 (c 5) (UK)

Woo Bih Li and Ng Hweelon (Bih Li & Lee) for plaintiff

Manjit Singh and Samuel Chacko (Manjit & Partners) for the defendant.

Amarjeet Singh JC

1 The undisputed facts are that the plaintiffs had commenced an action earlier (S 1842/92) on 9 September 1992 against one Quah Wee Tiong (“Wee Tiong”) a stock broker employed by them, claiming a sum of $1,552,027.99 plus interest in respect of his liabilities to the plaintiffs arising from his stock and share dealings. On 11 September 1992 the plaintiffs obtained an order to arrest him in the action but the attempt to serve the order on him at 8 Jubilee Road where he resided with the defendant, his father after it was obtained, was unsuccessful. On 15 September 1992, the plaintiffs obtained an order for interim injunction in the said action to restrain him from disposing or otherwise dealing with his assets. On the same date, the plaintiffs' solicitors, Allen & Gledhill immediately informed Wee Tiong's solicitors, David Lim & Partners, who were then the solicitors of Wee Tiong in the sale of a property at 8-A Duchess Park of the said order that had been obtained but the order remained at that time unserved personally on Wee Tiong. Wee Tiong's brother Quah Wee Tong (“Wee Tong”) was then working as a solicitor in David Lim & Partners. The said firm under their reference: DL/QWT/ 92-00360-8/km acknowledged Allen & Gledhill's letter on the same day. The initials DL and QWT stand for David Lim/Quah Wee Tong. The plaintiffs' solicitors were in effect informed by M/s David Lim eventually on 21 September 1992 that after repayment of the financiers' mortgage loan there was no balance of moneys left to repay any moneys to the plaintiffs or other creditors. Wee Tiong was eventually arrested by the Sheriff on 24 April 1993 at 8 Jubilee Road and brought before me in chambers. He was, however, discharged by me after a hearing. On 3 May 1993 Wee Tiong entered an appearance to the said action brought against him.

2 On 26 July 1993 the plaintiffs obtained judgment against Wee Tiong in the sum claimed as stated earlier. The plaintiffs thereafter learnt in August 1993 that 720 shares in a company known as Soon Aik (Pte) Ltd (“Soon Aik”) had been transferred by Wee Tiong to his father the defendant herein who was the patriarch of the family business Soon Aik. Soon Aik owns land in Singapore.

3 On 18 August 1993, the plaintiffs' solicitors wrote to M/s Menon & Associates, the auditors of Soon Aik and asked a number of questions which were responded to by M/s Menon & Associates by letter on 19 August 1993. The questions and answers respectively were as follows:

(a)	Q:	What is the actual date of transfer of the shares from Quah Wee Tiong to Quah Kay Tee?
	A:	Transfer form (from Quah Wee Tiong to Quah Kay Tee) dated 8 December 1992, duly executed.
(b)	Q:	What is the date of the instrument of transfer?
	A:	Directors' resolution regarding the said transfer dated 7 December 1992.
(c)	Q:	What is the consideration that was given for the transfer of the share?
	A:	Pages 1 and 6 of Mr Quah Kay Tee and Mr Quah Wee Tiong from the statutory register.

4 M/s Menon & Associates enclosed in their reply to questions (a) and (b) the directors' resolution dated 7 December 1992, a transfer form dated 8 December 1992 and pp 1 and 6 as hereinabove. The relevant parts of the directors' resolution and transfer form state respectively as follows:

Directors' resolution

Transfer of shares

Resolved that 720 shares of S$10 each, for a consideration amount of S$10, be and are hereby approved to be transferred from Mr Quah Wee Tiong to Mr Quah Kay Tee. …

Transfer

I, Quah Wee Tiong, 8 Jubilee Road, Singapore 0512 in consideration of the sum of S$10 paid by Quah Kay Tee, 225D...