Tokyo Investment Pte Ltd and Another v Tan Chor Thing

JurisdictionSingapore
CourtCourt of Three Judges (Singapore)
JudgeChao Hick Tin J
Judgment Date13 July 1993
Neutral Citation[1993] SGCA 48
Citation[1993] SGCA 48
Docket NumberCivil Appeal No 28 of 1991
Published date19 September 2003
Plaintiff CounselAndre Yeap (Allen & Gledhill)
Defendant CounselKenneth Tan (Rajah & Tann)
Date13 July 1993
Subject MatterCivil Procedure,Whether transactions and security furnished rendered illegal and unenforceable,Whether leave to defend should be granted,Summary judgment,Parties not in pari delicto,Pledge of shares to broker as security for trading account,Contract,Futures trading carried out by unlicensed futures broker in contravention of statute,Appeal,Transactions carried out by unlicensed futures broker in contravention of statute,Construction of statute,Financial and Securities Markets,Futures,Whether pledge and underlying transactions illegal and unenforceable,Staututory illegality,ss 2, 11(1)(a), (b), (d), (3), 14, 16 & 22 Futures Trading Act (Cap 116),O 14 Rules of the Supreme Court 1970,Complex points of law,Whether court should assist owner of shares in recovering shares,Illegality and public policy,Financial markets

This was an appeal against a decision of Chan Sek Keong J [see [1991] 3 MLJ 87 ] who confirmed a decision of the assistant registrar granting to the respondent on an O 14 application a declaration that the respondent was entitled to possession of 290,000 shares of seven Malaysian companies listed on the Stock Exchange of Singapore, damages and costs. Having heard the appeal, we dismissed it. We now give our reasons.

The respondent was trading in Japanese red beans through a company, called Heritage Commodities Pte Ltd (Heritage). For that purpose a written agreement dated 27 July 1987 was entered into between them. On or about 3 September 1987 the respondent pledged the 290,000 shares (with executed blank transfer forms) which he owned to Heritage as security for his trading. Some one and a half months later, on 20 October 1987 he instructed Heritage to close his trading account, settle the amount due to him and return the shares. On 2 November 1987 Heritage duly closed the account and paid the respondent the sum of $100,404.40. He signed an acknowledgment on the same day stating that he had `no further claim or whatsoever` against Heritage on the account. The respondent alleged that the shares were never returned to him although he had requested them.

Some two weeks later, on or about 18 November 1987, the police raided the offices of Heritage and seized documents, including those relating to the 290,000 shares. The police were investigating the trading activities of the first appellants, Tokyo Investment Pte Ltd.

Following the police investigations the first appellants were charged under s 11(1)(d) of the Futures Trading Act (Cap 116) (hereinafter referred to as `the FT Act`) for having, between 7 and 26 October 1987, carried on the business of trading in the Hang Seng Index Futures (`HSI futures`) without a licence. The first appellants pleaded guilty to the charge and were fined. The first appellants admitted that they had acted as futures broker representatives of the second appellants and were paid a service fee of $20,000 a month.

At the conclusion of their investigations, the Singapore Police were prepared to release the shares. However, the first appellants claimed to be entitled to those shares on behalf of the second appellants which were a Hong Kong company and a licenced dealer there. At that point of time the respondent had settled all outstandings due from him to Heritage and had absolutely ceased trading with Heritage. Thus, the respondent instituted this action to establish his entitlement to the possession of those shares.

The basis of the second appellants` claim to the shares was that the shares were pledged to them as security for the trading account of the respondent`s brother, one Tan Chor Koon (`TCK`). They claimed to be the equitable owners of those shares.

One Steve Lee Woon Lou (`SL`) was the person in Heritage who handled the respondent`s account. He was a director in both Heritage and in the first appellants. SL stated that on 20 October 1987 when the respondent stopped trading with Heritage, (i) he allowed TCK to deliver the shares to SL as a director of the first appellants to hold for the second appellants by way of security for TCK`s trading account with the second appellants; (ii) he signed a receipt for the shares (but no receipt could be produced by SL); (iii) he closed his account on 2 November 1987. In further support of their case the second appellants produced the following documents signed by TCK: (a) a customer`s agreement dated 15 October 1987;

(b) a pledge agreement dated 20 October 1987 in which the second appellants acknowledged receipt of the shares; and (c) a list of the shares. Both the customer`s agreement and the pledge agreement were signed by SL on behalf of the second appellants.

TCK did not file any affidavit in the proceedings. Neither was he made a party thereto. We further noted that neither did the respondent explain why he left the shares in the possession of Heritage until 18 November 1987 when the police seized them.

In the light of the foregoing and quite rightly so, counsel for the respondent had conceded before the learned judge and before us that there was a triable issue on whether the respondent had consented to TCK pledging the shares to the second appellants. That concession notwithstanding, the learned judge accepted the argument, which we also accepted, that this was not an obstacle to judgment being given for the respondent because even if there had been consent on the part of the respondent, the pledge was illegal because the underlying transaction was illegal by virtue of s 11(1)(a) of the FT Act.

The learned judge found that the first appellants acted as the agents of the second appellants in carrying on the business of futures trading in Singapore. In coming to this finding he relied on these facts. One, the admission of the second appellants that the first appellants were their service agents in Singapore. Two, copies of the second appellants` printed buying and selling order forms duly signed by SL in Singapore with respect to TCK`s transactions with the second appellants; these documents with the executed prices indicated thereon showed that SL was taking buying and selling orders from TCK as agent of the second appellants. Although the appellants denied that the second appellants were carrying on futures broking business in Singapore through the first appellants, this denial per se could not found a defence upon which leave to defend should be given. As Ackner LJ observed in Banque de Paris et Des Pays-Bas (Suisse) SA v Costa de Naray , at p 23:

... the mere assertion in an affidavit of a given situation which is to be the basis of a defence does not, ipso facto, provide leave to defend; the court must look at the whole situation and ask itself whether the defendant has satisfied the court that there is a fair or reasonable probability of the defendant`s having a real or bona fide defence.



It was common ground that neither the first nor the second appellants were licensed futures brokers under the FT Act. Counsel for the appellants submitted that there were the following triable issues: firstly, whether the transactions were transactions to which the FT Act applied; secondly, whether the first appellants were authorized to act for the second appellants in the manner in which they did; thirdly, whether the first...

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9 cases
  • MP-Bilt Pte Ltd v Oey Widarto
    • Singapore
    • High Court (Singapore)
    • 26 March 1999
    ...This practice has been approved and applied by the Singapore Court of Appeal in Tokyo Investment Pte Ltd & Anor v Tan Chor Thing [1993] 3 SLR 170 . 15. Implied terms must be reasonable, necessary and consistent with express terms Now I shall consider the objections raised by the defendant. ......
  • Ochroid Trading Ltd and another v Chua Siok Lui (trading as VIE Import & Export) and another
    • Singapore
    • Court of Three Judges (Singapore)
    • 22 January 2018
    ...Co Ltd v Ranchhoddas Keshavji Dewani [1960] AC 192 applied by this Court in Tokyo Investment Pte Ltd and another v Tan Chor Thing [1993] 2 SLR(R) 467); where the plaintiff entered into the contract on the basis of fraud, duress or oppression (see, for example, the Court of King’s Bench deci......
  • Vestwin Trading Pte Ltd and Another v Obegi Melissa and Others
    • Singapore
    • High Court (Singapore)
    • 27 June 2006
    ...application for summary judgment does not necessarily mean that leave to defend must be given: Tokyo Investment Pte Ltd v Tan Chor Thing [1993] 3 SLR 170. (b) Where the plaintiffs’ entitlement to judgment depends on a clear-cut question of law, the court will hear full arguments as to the p......
  • MP-Bilt Pte Ltd v Oey Widarto
    • Singapore
    • High Court (Singapore)
    • 26 March 1999
    ...This practice has been approved and applied by the Singapore Court of Appeal in Tokyo Investment Pte Ltd & Anor v Tan Chor Thing [1993] 3 SLR 170 . 15. Implied terms must be reasonable, necessary and consistent with express terms Now I shall consider the objections raised by the defendant. ......
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