Teo Siew Har v Lee Kuan Yew

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 16 September 1999
• Neutral Citation: [1999] SGCA 70
• Docket Number: Civil Appeal No 303 of 1998
• Date: 16 September 1999
• Published date: 26 November 2003
• Year: 1999
• Plaintiff Counsel: Daniel John and Michelle Jeganathan (John Tan & Chan)
• Citation: [1999] SGCA 70
• Defendant Counsel: Davinder Singh SC, Hri Kumar and Lim Lei Theng (Drew v Napier)
• Court: Court of Appeal (Singapore)
• Subject Matter: Presumption against,Civil Procedure,Whether wife of defendant against whom plaintiff has no cause of action may be joined as second defendant,Mareva injunctions,Gifts,Resulting trust,Whether presumption of advancement applicable,Whether damages should be ordered,Parties,Whether defendant has equitable interest in assets held by wife,Whether Mareva injunction may be granted against second defendant,Principles relating to assessment of such damages,Undertaking as to damages for Mareva injunction

(delivering the judgment of the court): This is an appeal against the decision of GP Selvam J denying the appellant`s prayer for an inquiry as to damages suffered as a result of an allegedly wrongfully obtained Mareva order against her personal and real property. In particular, she also appeals against that part of the decision of the trial judge where he, while recognising that the Mareva order should not have been extended to the personal effects and clothing of the appellant, held that she was nevertheless not entitled to general damages for mental stress and anxiety brought about by that wide order.

The background

The respondent is the Senior Minister and former Prime Minister of Singapore. The appellant is the wife of Mr Tang Liang Hong (`Tang`), a member of the Worker`s Party who unsuccessfully contested the General Elections in Cheng San GRC in late 1996.

During the course of the Worker`s Party election hustings, Tang made certain remarks that became the subject of 12 defamation suits brought against him by the respondent and ten other People`s Action Party (`PAP`) leaders, including the present Prime Minister, Mr Goh Chok Tong.

Tang left Singapore just after the commencement of the actions and has not returned since. As a result, on 27 January 1997, the respondent and the other PAP leaders applied for and obtained a world-wide Mareva order restraining Tang from disposing of his assets. In the same application, the appellant was joined as a second defendant to the defamation suits and all assets held in her name were similarly restrained. The terms of this order prevented her from removing from Singapore or disposing of any of her assets whether owned individually or jointly with Tang, up to the aggregate value of $11.2m, that sum being the total estimated claims in the 12 defamation suits. The basis for restraining her assets was that she held them as a nominee of, or on trust for, Tang.

At the time, the main asset was their matrimonial home at 75, Hua Guan Ave (`the Hua Guan property` or `the property` as may be appropriate), which was held in the sole name of the appellant.

Under the terms of the Mareva order, both Tang and the appellant were required within five days to file an affidavit setting out all their assets, with relevant details, whether located in Singapore or elsewhere. However, they failed to comply with the same. Thus, on 17 February 1997 the respondent and the other PAP leaders obtained an order appointing a Receiver for the assets of Tang and the appellant. Under this order, the Receiver was accorded the sole right and power to sell the assets of the appellant and Tang, but he was only to exercise that power at the joint request of the appellant and Tang, and provided the proposed sale was bona fide .

By the time the hearing of the present proceedings took place before GP Selvam J, judgment had already been entered against Tang in all the 12 suits and damages were assessed at $3.63m in total. All the judgments have remained unsatisfied and Tang was made a bankrupt on 6 February 1998.

At the time the Mareva injunction was granted, the property was mortgaged to Oversea-Chinese Banking Corporation Ltd (OCBC) for substantial overdraft facilities. OCBC had since taken possession of the property and, in exercise of its powers as a mortgagee, had sold the property for $2,970,000, leaving a shortfall of about $562,168.67 still owing to OCBC. We ought to add that following the financial crises that hit this region in 1997/98 the property market in Singapore had declined sharply. In line with the general market, the value of the Hua Guan property had depreciated significantly between the time of the Mareva injunction and the time of its sale by OCBC.

At the commencement of the hearing of these proceedings, the respondent indicated that he would without pre-condition, and as a gesture of goodwill, lift the Mareva injunction as against all the appellant`s assets. However, the appellant persisted in her stand that the Mareva injunction was wrongfully obtained against her assets and there should be an inquiry as to damages, pursuant to the respondent`s undertaking to court.

The decision below

In the court below the appellant contended that all the assets, including the Hua Guan property, belonged to her and that they should not be subjected to the Mareva injunction. She said that as the respondent had no claim against her personally, she should not be made a party to the defamation suit. In view of the injunction, she had suffered damages and there ought to be an inquiry on that.

In refusing to order an inquiry, the learned judge made the following determinations:

(i) the appellant was properly joined as a defendant to the action against Tang, as the respondent had alleged that Tang had an equitable interest in the assets held by the appellant. The respondent had a clear right to attach any equitable interest which Tang had in assets held in the name of the appellant.

(ii) Tang had an equitable interest in the Hua Guan property. He felt that in this day and age, the presumption of advancement is a moribund doctrine as regards property acquired during marriage and it has now been reclassified as a judicial instrument of last resort. In the circumstances of the present case he did not think the presumption of advancement could really apply as the common intention of the parties, gleaned from objective evidence, was that the property which was used as their matrimonial home was to belong to both.

While the learned judge, however, felt that the scope of the Mareva injunction was too wide as it covered everything owned by the appellant, including her personal effects, he did not think that any inquiry as to damages on account of that was called for as the appellant had not shown that she had suffered any damage on account of the extended scope of the injunction. In his view, `damages` in the undertaking given to court did not mean general damages which would be awarded for a tortious claim but special damages which would be awarded in a claim in contract for actual losses suffered.

The appeal

Before us, similar points to those made in the court below were advanced. Therefore, the issues before us are:

(i) should the appellant be joined as a defendant

(ii) has it been established that Tang had an equitable interest in the property

(iii) should an inquiry as to damages be ordered for mental distress on account of the extended scope of the injunction.

We will examine each issue in turn.

The joinder of the appellant

It is clear that generally a Mareva injunction is only granted against a person where there exists an action, actual or potential, claiming substantive relief which the High Court has the jurisdiction to grant and in respect of which the Mareva order is an ancillary relief: The Siskina [1979] AC 210. But there are exceptions to this rule where the courts have granted a Mareva injunction against a third party as ancillary or incidental to the cause of action and even to join the third party as a co-defendant.

In SCF Finance Co Ltd v Masri [1985] 2 All ER 747[1985] 1 WLR 876 the plaintiffs commenced proceedings claiming a sum of money from a certain Mr Masri, who was a resident of Jordan and out of the English jurisdiction. His wife, who had accounts at various banks in London, was joined as a second defendant to the suit (apparently at her instance) and a Mareva injunction covering Mr Masri`s assets was extended to cover her said accounts. The wife claimed ownership to the assets in her accounts and asked that the injunction against her be discharged. The Court of Appeal dismissed her contention. Lloyds LJ described the manner in which the court should consider an application to issue a Mareva injunction over assets held by a third party as follows:

(i) Where a plaintiff invites the court to include within the scope of a Mareva injunction assets which appear on their face to belong to a third party, eg a bank account in the name of a third party, the court should not accede to the invitation without good reason for supposing that the assets are in truth the assets of the defendant;

(ii) Where the defendant asserts that the assets belong to a third party, the court is not obliged to accept that assertion without inquiry, but may do so depending on the circumstances. The same applies where it is the third party who makes the assertion, on an application to intervene;

(iii) In deciding whether to accept the assertion of a defendant or a third party, without further inquiry, the court will be guided by what is just and convenient; not only between the plaintiff and the defendant, but also between the plaintiff, the defendant and the third party;

(iv) Where the court decides not to accept the assertion without further inquiry, it may order an issue to be tried between the plaintiff and the third party in advance of the main action, or it may order that the issue await the outcome of the main action, again depending in each case on what is just and convenient;

(v) On the facts of the present case the judge was in my view plainly right to hold that he could not decide the matter without further inquiry.

In TSB Private Bank International SA v Chabra [1992] 2 All ER 245 the position was taken further. In this case, Mummery J dismissed an application to strike out an order under O 15 r 6(2)(b)(ii) of the Rules of the Supreme Court directing that a company, BHL, be added as a party to the action against the major shareholder in BHL, a Mr Chabra, who had since left the jurisdiction. He did this despite there being no cause of action by the plaintiff against BHL. But, there the plaintiff had asserted that assets apparently held in the name of BHL were actually owned beneficially by Chabra. By adding BHL as a party, the court there went one step further than the procedure formulated in SCF Finance Co Ltd v Masri , for determining whether the...