Tan Swee Wan and another v Johnny Lian Tian Yong

• Jurisdiction: Singapore
• Judge: George Wei J
• Judgment Date: 26 July 2018
• Neutral Citation: [2018] SGHC 169
• Court: High Court (Singapore)
• Docket Number: Suit No 1238 of 2015
• Published date: 18 June 2019
• Year: 2018
• Hearing Date: 14 March 2018,10 April 2018,15 March 2018,19 March 2018,20 March 2018,21 March 2018,16 March 2018,13 March 2018
• Plaintiff Counsel: Wendell Wong Hin Pkin, Priscylia Wu Baoyi and Alexis Loo Quan Rung (Drew & Napier LLC)
• Defendant Counsel: N Sreenivasan, SC and Claire Tan Kai Ning (Straits Law Practice LLC)
• Subject Matter: Contract,Formation,Certainty of terms,Misrepresentation,Statements of intention,Tort,Fraud and deceit,Trusts,Constructive trusts
• Citation: [2018] SGHC 169

George Wei J:

This action concerns a project dating back to around middle of 2010 between Tan Swee Wan and Kelvin Low Keng Siang (the “first plaintiff” and “second plaintiff” respectively, and collectively “the plaintiffs”) and Johnny Lian Tian Yong (“the defendant”). The project involved developing computer software for use in software asset management and computer systems, with the intention of ultimately listing the company to be set up for the project (“the Project Company”) on the NASDAQ Exchange in the United States (“the Project”).

The plaintiffs’ role was to develop the computer software. The defendant’s role was essentially to raise funds and to bring in investors. For reasons which I shall discuss in detail later, the plaintiffs withdrew from the Project in or around June 2011. The circumstances leading to their withdrawal are heavily disputed and include alleged issues over the development of the software, its commercial potential and problems in respect of funding. The defendant’s basic position is that because of issues over the state of development of the software and the projected revenue stream, the investor who was supposed to provide the main source of funding for the project decided not to proceed with his investment. The plaintiffs’ position is that, at the time of their decision to withdraw from the Project, the defendant concealed the fact that the funds had in fact been raised and the Project was essentially on track. On this basis, the plaintiffs assert they are entitled to claim certain contractual payments.

The plaintiffs commenced this suit against the defendant on 3 December 2015. Three alternative causes of action were pleaded:¹ First, the plaintiffs claim that the defendant breached an oral agreement entered into by the parties sometime in 2010 in respect of the Project (“the Oral Agreement”). Second, the plaintiffs assert that if there was no Oral Agreement, the defendant made fraudulent misrepresentations, thereby inducing the plaintiffs to enter into a subscription agreement (“the Subscription Agreement”) in connection with the Project around 24 January 2011.² Third, the plaintiffs claim that sometime in 2010, they reached a “common understanding” or agreement with the defendant concerning the defendant’s duties in respect of fund raising. These funds were in fact raised sometime in 2011 by the defendant for the Project but the defendant failed to apply the funds in accordance with the common understanding and has failed to provide any account of the monies raised.³ The Plaintiffs accordingly claim to have suffered loss and damage and to be entitled to an account on the basis of breach of constructive trust.

The defendant denies the plaintiffs’ allegations and claims. He also brings a counterclaim for a loan totaling S$400,000 made to the first plaintiff sometime in March or April 2011.⁴

The trial was held over seven days. A total of four witnesses were called, including the first and second plaintiffs, the defendant, and a witness for the defendant, Mr Chang Meng Heng, from Bizpoint International Pte Ltd (“BPI”).

I now deliver my judgment, which I shall structure as follows: Overview of the plaintiffs’ case. Overview of the defendant’s case. The counterclaim. The decision. Miscellaneous points. Conclusion.

While I shall begin with the plaintiffs’ case and evidence, I shall indicate those points on which there is no substantial dispute between the parties. I will also touch on some key areas in which the defendant’s and the plaintiffs’ cases diverge, which will then be elaborated on if necessary in the following section setting out the defendant’s case.

Overview of the plaintiffs’ case The background

The first plaintiff and the defendant met around 1986 when they were members of the Singapore Police Force.⁵ The defendant left the Police Force sometime in 1991 and became a businessman. The first plaintiff remained and thereafter became acquainted with the second plaintiff around May 1997. At this time, the first plaintiff was heading the Computer Crime Branch. The second plaintiff was his subordinate.

Sometime in 1998, the first plaintiff introduced the second plaintiff to the defendant so that the second plaintiff might obtain advice on the engagement of a domestic helper. The defendant, after leaving the Police Force in 1991, was involved in various business ventures including that of a domestic helper agency.⁶ I note that the first plaintiff’s Affidavit of Evidence-in-Chief also makes a passing reference to the defendant as “an agent in a multi-level marketing business”.⁷ This was not elaborated on in the plaintiffs’ evidence and was not specifically touched on in cross-examination. I shall return to this at the end of the judgment.

The defendant asserts that he was introduced to the second plaintiff sometime in 2002 (and not 1998), but the parties have no serious disagreement as to how they became acquainted. There is no dispute that the defendant was the first to leave the Police Force to try his hand in business. As will be examined in more detail later, the defendant has held directorships (executive and non-executive) in many companies involved in a wide range of businesses. It is clear that he is often brought into companies as an investor, usually receiving shares and sometimes being given a non-executive director’s position. The monies invested may be his own or sourced from or combined with sums raised from other investors whether in Singapore, China or elsewhere. In other cases, the defendant may also take a more active management role as an executive director, that is, to come on board the company for the purpose of helping to grow the business – possibly to the point where a listing on a recognised stock exchange becomes possible.

While the defendant left for the business world in 1991, the first plaintiff remained in the Police Force where he acquired experience in computer forensic criminal investigation. The first plaintiff also acquired a degree in science from the National University of Singapore while with the Police Force.⁸ The second plaintiff also appears to have served in the area of investigation of computer crimes.⁹ In this way, there is no doubt that, as compared to the defendant, the plaintiffs were far better acquainted and much more familiar with computer systems and computer programming. This forms the backdrop against which the plaintiffs and defendant came together to collaborate for the Project that lies at the heart of this action.¹⁰ That said, I note that while the first plaintiff asserts that he is not familiar with financial matters and simply brought technical skills to the table, I am satisfied that the first plaintiff has greater familiarity and involvement in financial matters than he is prepared to acknowledge. The relevance of this will become clearer later. On the other hand, while it has been suggested that the defendant is more familiar with information technology than he admits, I have the clear impression that he is not an IT aficionado and that his IT knowledge is rather general in nature.

The first plaintiff left the Police Force sometime in 1998 and joined Microsoft Singapore for about a year, working in intellectual property enforcement. Thereafter, he joined Seagate for two years followed by a short period at KPMG (forensics and litigation support).¹¹

By 2001, the first plaintiff and the defendant had become close friends. The second plaintiff did not know the defendant as well as the first plaintiff did, but their relationship was also cordial and they were on friendly terms. In general, it appears that the defendant had much more frequent contact with the first plaintiff as opposed to the second plaintiff. It seems the second plaintiff was based in China for much of the period when certain key discussions or matters transpired between the first plaintiff and defendant. The defendant’s evidence, which I accept, is that he mostly left it to the first plaintiff to explain the discussions to the second plaintiff.

Unfortunately, as a result of the dispute that subsequently arose over the Project and which led to this law suit, the friendship between the parties has been lost and replaced by considerable animosity.

One feature of this case is the lack of contemporaneous documentation to establish, support and corroborate the evidence of the witnesses on many key issues in dispute between the parties. While there are some emails in evidence (together with their attachments), it seems that many of the discussions between the parties were never recorded or confirmed by minutes or emails. Indeed, as will be seen, the material record on the agreement between the parties in respect of the Project is surprisingly sparse and incomplete given the size of the deal contemplated. The plaintiffs and defendant have explained this lack of documentation by saying that there was a good deal of trust between the parties and that it was not thought necessary to have everything recorded or confirmed in writing. After all, they were friends who helped each other out on personal matters from time to time.¹²

The setting up of Tecbiz

Sometime around early 2001, the plaintiffs decided to start their own business together with Mr Ong Cheng Ho (“Mr Ong”), who was also a police investigator, leveraging on their acquired skills in investigating computer crimes. The defendant was invited to join as an investor and to provide general business advice. The plan was to enter the market for computer forensics and detection and prevention of copyright infringement and software piracy.¹³ Pursuant to this plan, around August 2001, the first plaintiff incorporated Tecbiz Sherlock Pte Ltd. The company’s name was subsequently changed to Tecbiz Frisman Pte Ltd (“Tecbiz”). At the time of incorporation, the first plaintiff held 60% of the shares and the remaining 40% of shares in...