SIC College of Business and Technology Pte Ltd v Yeo Poh Siah and others

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 22 January 2016
• Neutral Citation: [2016] SGCA 5
• Plaintiff Counsel: Prakash Pillai, Koh Junxiang and Clement Ong Yuan Kun (Clasis LLC)
• Docket Number: Civil Appeal No 45 of 2015
• Date: 22 January 2016
• Hearing Date: 06 November 2015
• Subject Matter: Third party costs,Evidence,Civil procedure,Improperly rejected evidence,Costs,Security
• Year: 2016
• Citation: [2016] SGCA 5
• Defendant Counsel: Jordan Tan and Keith Han (Cavenagh Law LLP)
• Court: Court of Appeal (Singapore)
• Published date: 26 January 2016

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

It is axiomatic that in order to arrive at a fully considered decision based on justice and fairness, the court concerned must have all the relevant evidence before it. The present appeal turns on this one fundamental point. Put simply, was all the relevant evidence before the judge in the court below? If it was not, then there would have been no way for the judge to have arrived at a considered decision simply because he would not have been in receipt of the full picture. It would be akin to a viewer focusing on only one part of a canvas instead of the entire painting. Another analogy would be the old adage that one should not miss the wood for the trees. We hasten to add that this does not imply in the least that the trees are unimportant. After all, without the trees there would be no wood. When, however, one is lost in the midst of the wood and takes only some of the trees as representing the entire wood, the overall perspective may be skewed and distorted as a result.

With these important general observations in mind, we turn to consider the present case. This is an appeal against the decision of the High Court judge (“the Judge”) in SIC College of Business and Technology Pte Ltd v Yeo Poh Siah and others [2015] SGHC 133 (“the GD”). The facts of the case are straightforward. However, the issue referred to in the preceding paragraph arises as a result of the manner in which the proceedings unfolded before the Judge in the court below. In essence, the case involved a claim and a counterclaim. The claim was dismissed as the plaintiff (“the Appellant”) had failed to provide the requisite security for costs. There has been no appeal against that particular decision. However, the defendants (“the Respondents”), who included the former employees of the Appellant, succeeded in their counterclaim and this is the subject of the present appeal. It is against this backdrop that the complications arose. Whilst the Judge acknowledged (in the GD at [3]; emphasis added) that “a flavour of the allegations brought by the plaintiff [the Appellant, and in relation to the main claim] provides helpful context”, he refused to consider certain key pieces of evidence with respect to the main claim in the trial of the counterclaim, even though such evidence might conceivably have been relevant to refute the Respondents’ evidence and case in the counterclaim. The qualification in the aforementioned sentence is of the first importance because whilst any evidence led with respect to the main claim could not possibly have affected the determination of the main claim simply because it had already been dismissed, this does not mean that such evidence was necessarily irrelevant vis-à-vis the counterclaim. In point of fact, however, because the Appellant was not permitted to lead key pieces of evidence vis-à-vis its main claim, it is unclear (in the present circumstances) whether any such evidence would in fact have refuted the counterclaim – and herein lies the crux of the present appeal (as we shall elaborate upon below). In this regard, it ought to be borne in mind that both the main claim and the counterclaim were inextricably connected with each other. Indeed, the Judge himself observed (significantly, in our view), as follows (see the GD at [17]):

Admittedly, the plaintiff [the Appellant] was hamstrung to the extent that its case was that the 18 transactions in the ledger was [sic] just part of a larger scheme to defraud the plaintiff, but its inability to shed light on the purported bigger picture was a corollary of the failure to provide security for costs for the main claim. [emphasis added in italics and bold italics]

We proceed to analyse this case more specifically by turning, first, to the facts of the case and decision below before rendering our decision.

The facts Parties to the dispute

The Appellant is a company in the private education business. Kannappan s/o Karuppan Chettiar (“KC”) was the chairman of the Appellant at the material time. His wife (Cenobia Majella (“CM”)) and brother (Subramaniam s/o Karuppan Chettiar) are directors of the Appellant. CM is the Appellant’s majority shareholder while TSG Investments Pte Ltd (“TSG”) and KC are the other shareholders. At all material times, TSG was controlled by KC and CM.

The first three Respondents were the Appellant’s employees at the material time – the first Respondent (Ken Yeo) was a director of the Appellant, the second Respondent (Koo Khee Chong (“Koo”)) was the chief financial officer of the Appellant and the third Respondent (Chua Puay Choo Alvinna) was a senior management consultant of the Appellant. They were also the directors of the fourth Respondent, Lincoln Collegiate of Business and Technology Private Limited (“Lincoln College”), a company which was incorporated on 8 January 2009 and which had been contracted to operate the Appellant’s business under certain licensing agreements.

Background to the dispute

KC and Ken Yeo had known each other since about 1991 when Ken Yeo was KC’s personal assistant in the Singapore Institute of Commerce (“SIC”), which was the predecessor of the Appellant. KC lost touch with Ken Yeo sometime in 1992 or 1993 when KC left SIC, and Ken Yeo also later left SIC to set up Auston Business School.

Sometime in 2005, Ken Yeo was made an employee of TSG by KC. KC was the executive chairman of TSG, which had acquired SIC in 1999.

In 2007, there was a corporate reorganisation and Ken Yeo was appointed the executive director of the Appellant.

Between 2009 and 2010 a number of agreements were signed as follows: The Harbridge Agreement dated 16 January 2009 was an agreement between the Appellant and Lincoln College (which was then known as “Harbridge Holdings Pte Ltd”) in which it was agreed that Lincoln College would be allowed to jointly operate a subsidiary of the Appellant known as SIC Tampines. Lincoln College agreed to be solely responsible for the operational expenses of SIC Tampines and agreed to pay the Appellant a licence fee. It was Ken Yeo’s evidence that it was implied that Lincoln College was entitled to the income of SIC Tampines. The SICC Agreement dated 9 September 2009 was an agreement between TSG, the Appellant and SIC College Pte Ltd (“SICC”) (incorporated by Ken Yeo and with Ken Yeo and Koo as the shareholders) in which SICC was appointed to manage the operations of the Appellant for an initial period of two years in return for SICC paying TSG a monthly fee of $150,000 during the period. Ken Yeo claimed it was obvious to all involved that SICC was entitled to the income of the Appellant while bearing the expenses. The Mutual Release Agreement (“MRA”) dated 11 February 2010 was an agreement between TSG, the Appellant and SICC in which the parties released one another from liability and SICC warranted that the final payment of $150,000 due on 31 December 2009 for licensing fees from Lincoln College to the Appellant would be made. The Second Harbridge Agreement dated 11 February 2010 was an agreement between TSG and Lincoln College wherein it was agreed that the latter was to manage the business of the Appellant and pay TSG monthly licensing fees and that it would be entitled to claim management fees from TSG, which was defined as the surplus of the Appellant’s licensed operation subject to the Appellant being able to accumulate an annual profit of $10,000 and being able to maintain its balance sheet as at 1 January 2010 or a net tangible asset of $600,000, whichever is higher.

It should be noted that the interpretation of the terms of the clauses in the above agreements was disputed.

Cracks in the relationship between KC and Ken Yeo emerged in February 2010 when KC sought arrears of the licensing fee and Ken Yeo wanted to terminate the SICC Agreement. These cracks were exacerbated when Ken Yeo shifted some furniture between the Appellant’s premises at Upper Serangoon Road and SICC’s premises. Eventually, a compromise was reached, resulting in the conclusion of the MRA and Second Harbridge Agreement.

On 10 December 2012, the Appellant and TSG filed a Writ of Summons against the first three Respondents. The Writ and Statement of Claim were subsequently amended for TSG to be removed as a plaintiff and for Lincoln College to be added as a defendant.

To summarise, the Appellant’s claim – ie, the main claim – concerned a number of heads of claim, to the effect that the first three Respondents were parties to a scheme to enrich Lincoln College (ie, the fourth Respondent) at the Appellant’s expense, and this included (amongst others) claims for a number of alleged unauthorised payments to Lincoln College between 30 October 2009 and 21 October 2010, the alleged misappropriation of funds from the Appellant’s students, and the alleged making of fraudulent payments to the Respondents which were fraudulently authorised as personal claims. These alleged unlawful acts were accomplished (at least in part) by the entering of fictitious entries into the Appellant’s books.

The Respondent’s defence against the aforementioned heads of claim were, besides the denial of the averments, essentially, that under the relevant licensing agreements, Lincoln College (or SICC) was entitled to the Appellant’s proceeds less expenses.

At a hearing on 18 March 2013 (this was a few days after the original Defence was filed on 12 March 2013), the then-counsel for the Respondents indicated to a Senior Assistant Registrar that he had instructions to apply for security for costs against the Appellant. The Senior Assistant Registrar ordered that the application for security for costs should be made by 28 March 2013. However, no application was made by that date.

On 6 December 2013 (almost a year after the original writ was filed), the Defence was amended to institute the counterclaim by Ken Yeo against the...