Tjong Very Sumito and others v Chan Sing En and others

• Jurisdiction: Singapore
• Judge: Steven Chong J
• Judgment Date: 21 June 2012
• Neutral Citation: [2012] SGHC 125
• Citation: [2012] SGHC 125
• Docket Number: Suit No 89 of 2010
• Published date: 15 April 2014
• Hearing Date: 24 February 2012,21 February 2012,15 February 2012,22 February 2012,26 March 2012,23 February 2012,16 January 2012,25 January 2012,29 May 2012,20 February 2012,16 February 2012,17 February 2012,26 January 2012,19 January 2012,17 January 2012,18 January 2012,27 January 2012,31 January 2012,30 January 2012,20 January 2012
• Plaintiff Counsel: Gabriel Peter, Tan Sia Khoon Kelvin David, Ong Pang Yew Shannon (Gabriel Law Corporation)
• Date: 21 June 2012
• Defendant Counsel: Nicholas Jeyaraj s/o Narayanan (Nicholas & Tan Partnership LLP),Murugaiyan Sivakumar Vivekanandan (Genesis Law Corporation),Ong Su Aun Jeffrey (JLC Advisors LLP)
• Court: High Court (Singapore)
• Subject Matter: Standard of proof,Lifting of Corporate Veil,Credit and Security,Allegation of forgery,Fraudulent Misrepresentation,Enforceability,Evidence,Gurantees and indemnities,Incorporation,Unlawful Means Conspiracy,Alter ego principle,Restitution,Tort,Resulting Trusts,Trusts,Companies,Money Had and Received,Contract,Construction,Economic Duress,Conversion,Guarantee

Steven Chong J: Introduction

This dispute relates to three separate agreements for the sale of shares in two Indonesian companies which ultimately own an Indonesian coal mine. The first agreement was, inter alia, for the sale of 72% of the shares in the first company to a subsidiary of a Singapore public listed company for US$18 million. The second and third agreements were for the sale of the balance shares in the two Indonesian companies to parties who were allegedly independent of the public listed company.

At the heart of this case, the main dispute concerned the non-payment of the full purchase price under the first agreement. It is common ground that about US$12 million of the purchase price was not paid to the sellers. It was instead paid to entities with whom the sellers have had no dealings and who were not parties to the agreement though they were identified under the terms of the first agreement to be “authorised to receive the [purchase price] for and on behalf of the [sellers]”. However, according to the former Managing Director of the public listed company (“the MD”) and the non-parties, the latter were entitled to retain the purchase price without the need to account to the sellers. In the course of the action, the MD as well as the non-parties proffered differing, unsubstantiated and even un-pleaded reasons to justify retention of the payments. Why? One would have expected that the basis for the payments would be explicitly stipulated in the first agreement if the non-parties were indeed entitled to retain the payments.

As regards the second and third agreements, the sellers claimed that the balance shares were, inter alia, sold under duress because the MD allegedly told the sellers that they would not receive the balance purchase price under the first agreement unless the balance shares were sold to his nominee for a fraction of its market value, ie, US$2 million.

This case is unusual in many respects. The following is just a sampling. First, numerous documents were alleged to have been forged or fabricated by the sellers. Although the MD and the non-parties retained handwriting experts to prove the forgery, the sellers, curiously, did not. However, at the trial, the MD’s handwriting expert conceded under cross-examination that a key document in the action which the MD had denied signing was probably signed by him. Second, the public listed company admittedly made an “erroneous” announcement over SGXNet, a system hosted by the Singapore Exchange (“SGX”) that allows users such as listed companies to submit their corporate announcements. The public listed company had “erroneously” announced that the payments to the non-parties were justified on the basis that the shares were originally owned by them when, in truth, this was plainly false. This alleged “error” came to light during the injunction hearing before me when it was conceded by the MD’s counsel that the announcement was incorrect as the non-parties were never the owners of the shares.¹ How did such an “error” occur? At the injunction hearing, it was presented as a “typographical error”.² Third, on the eve of the trial, one of the sellers dramatically applied to be separately represented and for leave to discontinue the action altogether. Fourth, although the buyers under the second and third agreements claimed to be independent of the public listed company, they were not able to produce any evidence that they had paid the purchase price. Instead, the evidence suggests that the purchase price under the second and third agreements was paid by the public listed company. Finally, the non-party to the first agreement who received the bulk of the purchase price under the first agreement, ie, US$10 million comprising cash and shares, was a no-show at the trial. The writ could not even be served on him. No one could establish whether he actually received the cash payment and why he was entitled to retain the cash payment and the shares. The sellers instead claimed at the trial that the MD pocketed the balance purchase price.

This dispute is responsible for generating two landmark decisions of the Court of Appeal, viz, Tjong Very Sumito and others v Chan Sing En and others [2011] 4 SLR 580 on the question whether a person can be ordinarily resident in two jurisdictions for the purposes of security for costs, and Tjong Very Sumito and others v Antig Investments Pte Ltd [2009] 4 SLR(R) 732 on the seminal definition of “dispute” for the purposes of applying for a stay of proceedings under the International Arbitration Act (Cap 143A, 2002 Rev Ed) in Suit 348 of 2008 (“the Antig Suit”). In the latter judgment, reference was made by the Court of Appeal at [11] to the “erroneous” SGXNet announcement.

This case first came before me some two years ago in connection with an ex-parte mareva injunction. Adopting the approach of the English Court of Appeal in Dubai Bank v Galadari [1990] 1 Lloyd’s Rep 120, although I accepted that the sellers had established an arguable case for conspiracy and fraudulent misrepresentation, I nonetheless set aside the ex-parte injunction on account of the sellers’ inexcusable delay in applying for the injunction, which undermined their belief in the alleged risk of dissipation of assets as such risk was grounded solely on a prima facie case of conspiracy or fraud.³ However, due to the troubling features of the dispute, I held over the inquiry as to damages suffered by reason of the interim injunction until after the outcome of the trial.⁴ On that occasion, I observed that the agreements were “no ordinary plain vanilla transactions” and that there “is clearly something more than meets the eye”.⁵ This became clearer as the trial unfolded.

The parties

The 1st plaintiff, Tjong Very Sumito (“Tjong”), is an Indonesian businessman involved in businesses dealing with inter alia iron ore, coal, property, and furniture.⁶ The 2nd plaintiff, Iman Haryanto (“Iman”), is Tjong’s brother,⁷ and the 3rd plaintiff, Herman Aries Tintowo (“Herman”), is Tjong’s friend and co-director in an events organisation company, Venus International Productions Pte Ltd.⁸ Neither Iman nor Herman has filed any Affidavit of Evidence-in-chief (“AEIC”) in this Suit.

The 1st defendant, Richard Chan Sing En (“Richard Chan”), is the former Managing Director of a Singapore public listed company, Magnus Energy Group Ltd (“MEGL”) and former director of MEGL’s wholly-owned subsidiary, Antig Investments Pte Ltd (“Antig”).⁹ Antig was incorporated on 1 June 2004, and Richard Chan was appointed its director on the same day.¹⁰ He resigned as Antig’s director on 15 May 2008 and left the employment of MEGL on 1 June 2008.¹¹ According to Tjong, Richard Chan was introduced to him by the 5th defendant, Alwie Handoyo (“Alwie”), on a social basisin Singapore in or around 2004. Alwie had apparently told Tjong that Richard Chan was someone whom Tjong could trust and who would help Tjong make money.¹²

Alwie is an Indonesian graduate from the California State University, Fresno. He claims to be a well-connected businessman who holds shares and directorships in various Indonesian companies.¹³ He is currently a director of the company which owns the Jakarta Stock Exchange.¹⁴ Alwie was introduced to Tjong in the late 1990s through one Mr Abi and Pak Rahardjo (“Rahardjo”),¹⁵ and has known Richard Chan since about 1999 or 2000, the two having dealt with each other “in relation to the telecommunication industry”.¹⁶ Alwie is also the husband of the 6th defendant, Susiana Chandra (“Susiana”), who is a homemaker.¹⁷

The 2nd defendant, Aventi Holdings Limited (“Aventi”), and the 4th defendant, Overseas Alliance Financial Limited (“OAFL”), are companies incorporated in the British Virgin Islands (“BVI”) which were identified as recipients of a large part of the purchase price under the 1st SPA (see [42] and [48] below). Both Aventi and OAFL were served with the writ of summons on 26 February 2010 at their registered office at Portcullis TrustNet Chambers (“Portcullis”) in Tortola, BVI,¹⁸ but neither has entered an appearance or defence. As will be discussed (see [69] to [75] below), it is not entirely clear who the ultimate owners of Aventi and OAFL are. It suffices to say for now that Alwie asserts that he is himself the controlling mind of OAFL while the 3rd defendant, Johanes Widjaja (“Johanes”), is the controlling mind of Aventi.¹⁹

Alwie claims to have known Johanes since 2000 or 2001.²⁰ To date, Johanes has not been served with the writ of summons as the plaintiffs have been unable to locate him based on his last-known residence and contact number, as provided by Alwie’s former solicitors.²¹ The plaintiffs took out a summons against Portcullis in March 2010 to compel the provision of information on Johanes.²² However, subsequent attempts to serve the writ on Johanes pursuant to such information have proved to be similarly futile.

Finally, the 7th, 8th and 9th defendants are Jake Pison Hawila (“Jake”), Advance Assets Management Ltd (“AAML”) and Edwin Sugiarto (“Edwin”) respectively. Jake and AAML (a BVI investment holding company of which Edwin is the sole shareholder-director)²³ are the purchasers of the balance shares owned by Tjong. Jake and Edwin have, respectively, known Alwie since 2000 and 2002.²⁴

In a twist of events, on 10 January 2012, shortly before the commencement of trial on 16 January 2012, Herman applied to be separately represented and for leave to discontinue his action,²⁵ which was granted on 13 January 2012. All references to the plaintiffs in this Judgment insofar as events prior to 13 January 2012 shall collectively mean Tjong, Iman and Herman. However, all orders made in this Judgment in relation to the plaintiffs shall refer only to Tjong and Iman given Herman’s discontinuance of his claim.

The sale and purchase agreements

The dispute concerns the execution and performance of three sets of sale and purchase...