Sim Seng Jin v Teo Chor Huan

• Jurisdiction: Singapore
• Judge: Clement Seah Chi-Ling
• Judgment Date: 10 October 2022
• Neutral Citation: [2022] SGDC 236
• Court: District Court (Singapore)
• Docket Number: District Court Suit No 1472 of 2021, District Court Appeal No 34 of 2022
• Published date: 18 October 2022
• Year: 2022
• Hearing Date: 05 October 2022,26 September 2022,25 July 2022,23 June 2022,16 February 2022,10 January 2022,11 January 2022,12 January 2022,13 January 2022
• Plaintiff Counsel: Khelvin Xu Cunhan (Rajah & Tann Singapore LLP)
• Defendant Counsel: Gopal Perumal and David Parasuraman (Gopal Perumal & Co)
• Subject Matter: Partnership,Common ownership of property,Whether partnership relationship established,Factors to be considered,Burden of Proof,Evidence,Proof of Evidence,Allegations of secret profits,Standard of Proof,Whether legal burden discharged,Witnesses,Whether adverse inference drawn for failure to call witnesses
• Citation: [2022] SGDC 236

District Judge Clement Seah Chi-Ling: Introduction

The Plaintiff and Defendant were co-owners of a property situated at No. 5C Hoe Chiang Road Singapore 089312 (the “5C Property”) from November 1995 when the property was purchased, until it was sold by way of a public auction on 20 September 2016.

The Plaintiff’s case was that the Plaintiff and the Defendant were in a partnership relationship by reason of their agreement to jointly purchase the 5C Property, rent it out, and to eventually realize capital gains by way of a sale, redevelopment or otherwise. Given the partnership relationship, the Plaintiff asserted that the parties owed fiduciary duties to each other.

The Plaintiff asserted further that the Defendant had breached the fiduciary duties owed to him by managing and renting out other properties in the same development in competition with the 5C Property, renting the property at an undervalue, failing to maintain the property in a reasonable condition, and making secret profits from the rental of the 5C Property.

The Defendant denied that any such partnership relationship existed. The Defendant’s case was that the Plaintiff and the Defendant were merely co-owners of the property, which they had agreed to hold at minimum costs by renting it out on a bare and unfurnished basis, pending any enbloc sale. The Defendant also denied making any secret profits in relation to the 5C Property.

The main issues in this lawsuit were whether the Plaintiff and Defendant were in a partnership relationship; and irrespective of the answer to the first question, whether the Defendant had made secret profits and/or underpaid rents collected by the Defendant for the property.

At the conclusion of the trial, I found that there was no intention between the parties to enter into a partnership relationship when they agreed to jointly purchase the property as co-owners in the hope of making capital gains should the property be put up for an enbloc sale. Accordingly, no fiduciary duties were owed by the Defendant to the Plaintiff. I also found that the Plaintiff had not discharged his burden of proving that the Defendant had made secret profits in relation to the 5C Property by under-declaring the rent or proceeds received from the property over the years. I accordingly dismissed the bulk of the Plaintiff’s claim, save that I made various orders for distributing the monies remaining in the joint account opened at the time of the purchase of the 5C Property to the respective parties. The Plaintiff is dissatisfied with my decision and has filed the present appeal.

Procedural history

In 2015, the Plaintiff took out an originating summons, HC/OS 1042/2015 (the “OS”), in the High Court seeking, inter alia, orders that: The 5C Property be sold, and the sale proceeds be distributed in equal shares after outstanding loan amounts were paid off; The Defendant account to the Plaintiff for a half share of all rental proceeds from the 5C Property; The amounts in the UOB Account (which was used to service the bank loan for the purchase of the 5C Property) be distributed; and Further or alternatively, damages in respect of the Defendant’s rental of the 5C Property to tenants at a price below prevailing market rates.

The parties subsequently agreed to a sale of the 5C Property, which had since been sold by way of a public auction on 20 September 2016 at $1,200,000. The sale proceeds were shared equally save for an agreed sum of $102,798.55 (the “Stakeholding Sum”) which was, at the request of the Plaintiff, being held by the Defendant’s solicitors as stakeholders pending the resolution of the remaining matters in this action. As the parties were unable to reach an agreement on the other disputed matters, the Plaintiff applied for the mater to be transferred to the State Courts (by way of HC/SUM 3364/2016 filed on 11 July 2016). On 27 September 2016, the High Court ordered, by consent, that the matter be transferred to the District Court, and the matter was re-numbered to DC/OSS 175/2016.

On 15 April 2021, DC/OSS 175/2016 came up for hearing, and was converted from an Originating Summons to a Writ and renumbered as DC/DC 1472/2021.

In the Writ action, the Plaintiff sought orders for payment to him of, inter alia: (a) $145,150 being his share of loss of rental in respect of the 5C Property; (b) $411,962.50 being his share of the secret profits made by the Defendant; (c) $22,955 being the Plaintiff’s share of the rent received by the Defendant from the 9C Property for the period when the 5C Property was vacant; and (d) $35,328.44 being compensation for the shortfall in the price at which the 5C Property was sold in September 2016 due to the poor condition of the property. Additionally, the Plaintiff sought an order for an account of the secret profits received by the Defendant pending further discovery, and a sum of $24,584.32, being the Plaintiff’s share of the monies remaining in the UOB Joint Account¹.

In the Writ Action, the Defendant sought, by way of Counterclaim, the amount of profits she would have earned had the 5C Property been sold on an enbloc basis.

As both the claim and counterclaim exceeded the jurisdiction of the District Courts, the Plaintiff and Defendant had confirmed that they would be limiting their respective claim and counterclaim to the District Courts’ jurisdiction of $250,000 and abandoning claims over that amount.

Background Facts

The Plaintiff and the Defendant were both qualified Chartered Accountants. They were long-time friends and had known each other since the early 1980s, when they worked in the same audit firm in Melbourne.

The Defendant eventually started her own accounting practice in Singapore. At the request of the Plaintiff, the Defendant had also rendered professional services and assisted the Plaintiff in company matters relating to Glen Industries (Asia) Pte Ltd and Grace Technologies Pte Ltd (“Grace Technologies”). These companies were part of the Yenom Group (“Yenom”). At the time, the Plaintiff was the group financial controller of Yenom.

Purchase of the 5C Property

In 1995, the Plaintiff and the Defendant jointly purchased the 5C Property as a joint investment. The Plaintiff and the Defendant each contributed one-half of the purchase price. The purchase price of the 5C Property was $601,880.00. A UOB loan of $420,000.00 was obtained for the purchase. The Plaintiff and the Defendant paid the difference in the purchase price in cash equally to complete the purchase.

The 5C Property was purchased to generate rental income, and to eventually realize capital gains from its sale, redevelopment, or otherwise. After the 5C Property was purchased, it was rented out. Neither the Plaintiff nor the Defendant resided there.

Ownership of Surrounding Properties by Defendant and her family

Even before the parties’ purchase of the 5C Property, the Defendant and her siblings had owned between them three properties in the Hoe Chiang Building (where the 5C Property is located) as well as in the neighboring Lim Teck Kim Building situated along Lim Teck Kim Road.

The Defendant was already (and still continues to be) the sole owner of No. 7D Hoe Chiang Road (the “7D Property”), which was purchased on or about 24 July 1989.

The Defendant and her brother jointly owned and continue to own another property at No. 10D in the Lim Teck Kim Building (the “10D Property”), which was purchased on or about 11 June 1991.

The Defendant’s sister solely owned and continues to own the property at No. 9C in the Hoe Chiang Building (the “9C Property”), which was purchased on or about 14 February 1990.

The Defendant had also looked after and managed these properties before the joint purchase of the 5C Property.

Rental Agreements entered into in respect of the 5C Property

It was undisputed that the 5C Property was rented out or left vacant, as the case may be, during the following periods: Rented to Excelsior/Peninsula Hotel from 1 February 1996 to 13 April 2000 as the hotel’s female staff hostel; Left vacant from 12 May 2000 to 6 January 2001; Rented to Excelsior/Peninsula Hotel again from 6 January 2001 to November 2003; Left vacant from November 2003 to 30 April 2004; and Rented to Ideal Accommodation (Singapore) Pte Ltd (“Ideal”), whose owner is one Tang Yong, from 1 May 2004 to 30 April 2016.

The State of the 5C Property

The Hoe Chiang Building, in which the 5C Property is situated, is located at the southern edge of the central business district. Although surrounded by modern high-rise building on all sides at the material times, the Hoe Chiang Building is part of an old development, the only one that is still undeveloped in the vicinity.

The said old development comprises of the Hoe Chiang Building and the Lim Teck Kim Building, each with five walk-up storeys. The first storey comprised commercial properties which are now occupied mainly by eateries. All other units (including the 5C Property) are residential properties, although some of them had been turned into offices.

For the Hoe Chiang Building, no management committee was ever constituted to look after the maintenance of the common areas. The owners of the apartments, including the 5C Property, did and do not pay any monthly maintenance fees. The staircases were often littered, and without common staircase lights. Given their conditions, the apartments were used more for the accommodation of foreign workers, and/or used as dormitories for such persons.

In relation to the 5C Property, it was generally undisputed that the property was in a poor physical state and condition, caused in part by the fact that the 5C Property was beset by serious and persistent water seepage and leakage issues. The problem was due to the poor maintenance of the open roofing terraces by owners of the top “D” level apartments.

According to the Defendant, whatever remedy to the water...