Wong Chong Yue v Wong Chong Thai

• Jurisdiction: Singapore
• Judge: Philip Pillai J
• Judgment Date: 11 January 2011
• Neutral Citation: [2011] SGHC 3
• Plaintiff Counsel: Anthony Leonard Netto (NettoWon LLC)
• Docket Number: Suit No 1071 of 2009
• Date: 11 January 2011
• Hearing Date: 21 September 2010,12 August 2010,10 August 2010,13 August 2010,11 August 2010,22 September 2010,20 September 2010,16 August 2010
• Subject Matter: Equity
• Year: 2011
• Citation: [2011] SGHC 3
• Defendant Counsel: Devinder K Rai and Navin Kripalani (Acies Law Corporation)
• Court: High Court (Singapore)
• Published date: 13 January 2011

Philip Pillai J: The action

The plaintiff, Wong Chong Yue, brings this suit against his brother, the defendant, Wong Chong Thai, for a declaration that their father Wong Shoa Ching (“Father”) had on 30 April 1993 created an express trust over 5311 shares in a company known as Malaya Construction Co (Pte) Ltd (“MCC”) in favour of the plaintiff, the defendant and their sister Mary Wong in equal shares. The defendant’s defence is that the 5311 shares in MCC (the “shares”) were transferred to him by their Father as a gift. The plaintiff also claims for breach of contract to refund the sum of CAN$60,000.00 and US$189,250.39 which he paid the defendant. The defendant denies that these were loans.

The plaintiff had originally also claimed to be beneficially entitled to a 50% share in 967 shares under a second express trust created in favour of the plaintiff and the defendant. Their Father transferred these in June 2000 to the defendant on trust for the plaintiff and the defendant equally. This was evidenced by a letter produced in the course of discovery dated 13 April 2000 by the Father to the defendant in the following terms:

To: Wong Chong Thai

Re: Malaya Construction Co. Ltd

Concerning the above company. I now informed [sic] you that my share of the proceeds from the liquidation of [MCC], be divided equally between you and Wong Chong Yue.

Dated this 13th day April, 2000.

Sgd

S.C. Wong

This is indisputably an express trust over “my [the Father’s] share[s]” which was created in April 2000 and which comprised the 967 shares which he then transferred to the defendant. The defendant has admitted the same. Accordingly this is not an issue before me.

There are two issues to be determined in this action: (i) whether the Father had created an express trust over the 5311 shares he transferred to the defendant on 30 April 1993, in favour of the plaintiff, the defendant and their sister Mary Wong in equal shares; and (ii) whether the plaintiff made the loans to the defendant and if so their recoverability in law.

The family background

The family history is a complex one in which the Father, now deceased, had in total four wives in Singapore and Hong Kong. In Singapore his two wives were Ong Siew Yong, with whom he had three children (the “OSY Line”), including one Wong Yue Yu ,and Lee Say Dee, with whom he had three children (the “LSD Line”): the plaintiff, the defendant and Mary Wong (the “LSD Line siblings”). The plaintiff, who is the eldest son in the LSD Line, had worked for several years for the Father in the family business in Sabah, Hong Kong and Singapore before migrating to Canada in 1982. The trial revealed the plaintiff’s chequered relationship with the defendant, with both of them working closely to defend Wong Yue Yu’s lawsuit against the Father and the plaintiff in Originating Summons 1245 of 1996 (“OS 1245”) but thereafter becoming estranged. Both the plaintiff and defendant in turn had poor and adversarial relations with Wong Yue Yu, their half-brother from the OSY Line. Wong Yue Yu had had an affair with the plaintiff’s wife in Canada, which led to their divorce. This unhappy extended family web cast a long shadow over the entire trial and coloured the oral evidence.

The Father, the patriarch of the extended family, owned and controlled MCC until he transferred the shares in the company to his two sons from different wives on 30 April 1993. The Father had at the same time transferred 5311 shares to Wong Yue Yu, who was the eldest son of the OSY Line, and 5311 shares to the defendant, the second son of the LSD Line. The Father retained 1 share, and 1 share was held by his brother (the plaintiff and defendant’s uncle). The remaining outstanding and issued shares of MCC comprised 967 shares which the Father had earlier transferred to another wife, Cecilia Brown, in Hong Kong, and 150 shares held by his wife Ong Siew Yong. Upon her decease, 75 shares devolved to the Father and the balance 75 shares devolved to Wong Yue Yu and his OSY Line siblings equally.

Subsequently the Father had as part of his divorce settlement with Cecilia Brown procured the return by her of 967 shares. The Father retained 100 shares and transferred 867 shares to the plaintiff. Wong Yue Yu filed OS 1245 against their Father and the plaintiff for a declaration that the Father’s transfer of 867 out of these 967 shares to the plaintiff was void, inter alia, because it was in breach of MCC’s articles of association.

The outcome of OS 1245 was that MCC was ordered to be liquidated and its properties distributed amongst the shareholders. The 967 MCC shares came to be registered in the name of the defendant and were, upon the Father’s written instructions, held in trust for the defendant and the plaintiff, as the defendant admits (see [2] above).

Preliminary Issue: Limitation Act

I first deal with the preliminary issue of whether the plaintiff’s claims for breach of trust and for account have been time-barred under ss 22(1) and (2), and 6(2), respectively, of the Limitation Act (Cap 163, 1996 Rev Ed) (“Limitation Act”). Section 22(1) and (2) of the Limitation Act reads as follows:

Limitations of actions in respect of trust property. 22. —(1) No period of limitation prescribed by this Act shall apply to an action by a beneficiary under a trust, being an action —

(a) in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy; or (b) to recover from the trustee trust property or the proceeds thereof in the possession of the trustee, or previously received by the trustee and converted to his use.

(2) Subject to subsection (1), an action by a beneficiary to recover trust property or in respect of any breach of trust, not being an action for which a period of limitation is prescribed by any other provision of this Act, shall not be brought after the expiration of 6 years from the date on which the right of action accrued.

Section 6(2) of the Limitation Act reads as follows:

(2) An action for an account shall not be brought in respect of any matter which arose more than 6 years before the commencement of the action.

The meaning and scope of s 22(1)(b) was examined in Soar v Ashwell [1893] 2 QB 390. Lord Esher MR said (at 393):

If there is created in expressed terms, whether written or verbal, a trust, and a person is in terms nominated to be the trustee of that trust, a Court of Equity, upon proof of such facts, will not allow him to vouch a Statute of Limitations against a breach of that trust. Such a trust is in equity called an express trust. If the only relation which it is proved the defendant or person charged bears to the matter is a contractual relation, he is not in the view of equity a trustee at all, but only a contractor; and equity leaves the contractual relation to be determined by the common or statute law. If the breach of the legal relation relied on, whether such breach be by way of tort or contract, makes, in the view of a Court of Equity, the defendant a trustee for the plaintiff, the Court of Equity treats the defendant as a trustee become so by construction, and the trust is called a constructive trust; and against the breach which by construction creates the trust the Court of Equity allows Statutes of Limitation to be vouched.

In the same judgment, Bowen LJ stated that (at 395 - 396):

The question therefore arises whether the claim of the plaintiff can be barred through lapse of time, by analogy to the Statute of Limitations. That time (by analogy to the statute) is no bar in the case of an express trust, but that it will be a bar in the case of a constructive trust, is a doctrine which has been clearly and long established ...

An express trust can only arise between the cestui que trust and his trustee. A constructive trust is one which arises when a stranger to a trust already constituted is held by the Court to be bound in good faith and in conscience by the trust in consequence of his conduct and behaviour. Such conduct and behaviour the Court construes as involving him in the duties and responsibilities of a trustee, although but for such conduct and behaviour he would be a...