Yeoh Wee Liat v Wong Lock Chee

Judgment Date20 August 2013
Date20 August 2013
Docket NumberSuits Nos 724 and 762 of 2011
CourtHigh Court (Singapore)
Yeoh Wee Liat
Wong Lock Chee and another suit

Quentin Loh J

Suits Nos 724 and 762 of 2011

High Court

Contract—Remedies—Specific performance—Contract for sale of shares—Whether specific performance appropriate remedy

Equity—Fiduciary relationships—When arising—Party to contract having sole discretion whether to perform—Whether fiduciary relationship arose

Evidence—Documentary evidence—Notice of non-admission—Requirements to be met by party seeking to admit document—Sections 64, 66, 67 and 69 Evidence Act (Cap 97, 1997 Rev Ed)

Evidence—Weight of evidence—Document relied upon as evidence of agreement—Party claiming to have no knowledge of that document—Contrast plea of non est factum—Whether any weight was to be given to such document

The plaintiffs each held 24.5% of the shares in a company known as Next Capital Pte Ltd (‘NCPL’), while the defendant and his wife held the remaining 51%. However, the plaintiffs alleged that the parties had in September 2009 agreed for them to hold 33% of the total each, with the defendant to hold the remaining 34% (‘the September agreement’). Transfers of the shares in January 2010 leading to their eventual shareholdings were contrary to that agreement. They sought orders for the share register of NCPL to be rectified to reflect their entitlement to 33% of the shares each, and for the defendant to effect the necessary transfers of shares to them. The plaintiffs also argued that the defendant was an errant fiduciary and that a constructive trust should be imposed on him in respect of all dividends, profits and other benefits derived from the excess shares held by him and his wife.

The defendant alleged that the September agreement was merely a non-binding understanding premised on NCPL pursuing a certain low-risk business model. That understanding was displaced in December 2009 when he undertook to secure financing for NCPL and the plaintiffs agreed for him to run one of the company's two restaurants (‘the December agreement’). He relied on share transfer forms executed by the plaintiffs for the transfer of 24.5% of NCPL's shares to their names as evidence of the December agreement.

The defendant also alleged that, under the December agreement, the plaintiffs were to contribute $122,500 each for their shares. The plaintiff in Suit No 724 of 2011, Yeoh, is said to have only paid for his shares in part, whilst the plaintiff in Suit No 762 of 2011, HRT Corporation, is said to have failed to pay for its shares entirely.

Held, allowing the claims:

(1) There was sufficient evidence that the parties had come to a contractually binding agreement sometime in September 2009 for the plaintiffs to hold 33% of NCPL's shares each and the defendant the remaining 34%: at [9] .

(2) The defendant's testimony that the September agreement was only a non-binding understanding was an afterthought introduced in an attempt to retract his earlier admission that the parties had indeed come to an agreement in September 2009: at [19] .

(3) There was no documentary evidence supporting the existence of the December agreement. The defendant's testimony regarding the circumstances of this alleged agreement was inconsistent and unreliable: at [23] .

(4) HRT Corporation had filed a notice of non-admission in respect of the share transfer form purportedly executed on its behalf. The defendant therefore had to produce the original document and prove that the signature thereon was in fact that of the person alleged to have signed it. As he had not done so, the share transfer form could not be taken to be evidence that HRT Corporation was aware that it had been only allocated 24.5% of the shares: at [31] .

(5) Yeoh asserted that the contents of the share transfer form were not brought to his attention when he signed it. He was not pleading the defence of non est factum. It was well-established that such a plea would not be entertained if the party relying upon it was oblivious to the contents of the document signed due to his negligence and carelessness. However, the defendant relied on the share transfer form as evidence of a prior agreement rather than as an agreement per se, and its weight as corroborative evidence would be undermined or even negatived if Yeoh could prove that he was not aware of what he was signing: at [33] .

(6) While Yeoh's claims that he was in the habit of signing company documents without reading them was self-serving and to be treated with scepticism, it was buttressed by other evidence. First, Yeoh and a representative of HRT Corporation both deposed that they had questioned the defendant on why he had changed NCPL's share structure without telling them and that he had responded by smiling wryly and saying ‘next time, read before you sign’. Secondly, the defendant's account of the circumstances of the signing of the share transfer form by Yeoh was highly inconsistent. Thirdly, documentary evidence in the form of a series of e-mails in October 2010 indicated that the plaintiffs only found out about the actual allocation of NCPL's shares at that point: at [34] , [35] and [40] .

(7) The defendant had personally stated in an e-mail that Yeoh had made payments totalling $114,676.32 as at 18 November 2009 and did not dispute further payments in the sum of $67,300. It was therefore found that Yeoh had established that he had made payments totalling $181,976.32 for his shares: at [43] and [44] .

(8) HRT Corporation's claim that both the defendant's and their share of NCPL's share capital was to be paid for by NCPL's initial shareholder was supported by the fact that neither had been asked to pay for their NCPL shares. Accordingly, it was found that no payments were due from HRT Corporation under the September agreement: at [49] and [50] .

(9) Specific performance of the September agreement was a just and equitable remedy on the facts. The parties had contracted to have very nearly equal stakes in NCPL, such that no one party would be the dominant shareholder, and not to be minority shareholders powerless to oppose a majority shareholder. Damages would therefore not be an adequate remedy: at [54] .

(10) The relationship between the defendant and the plaintiffs did not possess the characteristics of a fiduciary relationship. It was no use for the plaintiffs to argue that Wong had complete control of the affairs of NCPL and was the only person with the power to instruct the corporate secretary in the allocation of NCPL's shares. It was invariably the case that every party to a contract would have a choice of whether to perform the contract. Further, the plaintiffs could not be said to be peculiarly vulnerable: at [57] .

Frame v Smith [1987] 2 SCR 99 (distd)

Jet Holding Ltd v Cooper Cameron (Singapore) Pte Ltd [2006] 3 SLR (R) 769; [2006] 3 SLR 769 (folld)

Lee Chee Wei v Tan Hor Peow Victor [2007] 3 SLR (R) 537; [2007] 3 SLR 537 (folld)

Oversea-Chinese Banking Corp Ltd v Frankel Motor Pte Ltd [2009] 3 SLR (R) 623; [2009] 3 SLR 623 (refd)

Susilawati v American Express Bank Ltd [2009] 2 SLR (R) 737; [2009] 2 SLR 737 (distd)

Evidence Act (Cap 97, 1997 Rev Ed) ss 64, 66, 67, 69

William Ong, Tan Xeauwei, Felicia Tan and Joseph Tay (Allen & Gledhill LLP) for the plaintiff in Suit 724/2011

Lim Ker Sheon and Wee Qian Liang (Characterist LLC) for the plaintiff in Suit 762/2011

David Chan, Koh Junxiang and Christine Ong (Shook Lin & Bok LLP) for the defendant.

Judgment reserved.

Quentin Loh J

1 Yeoh Wee Liat (‘Yeoh’) and HRT Corporation Pte Ltd (‘HRT’) are the plaintiffs in Suit No 724 of 2011 and Suit No 762 of 2011 respectively. Wong Lock Chee (‘Wong’) is the defendant in both suits. The main question in these suits is the rightful percentage of shares held by each of the parties in a company, Next Capital Pte Ltd (‘NCPL’). The answer depends on what the parties agreed and whether the plaintiffs have paid for their shares.

The background

2 HRT's sole director is one Phuah Bee Lee (‘Phuah’). However, at all material times it was represented in its dealings by Phuah's husband, Richard Kuah Ah Eng (‘Richard’). HRT is wholly owned by two of Richard's sisters. Richard, Yeoh and Wong were longstanding friends and business associates who had entered into numerous investments together. NCPL is a company in the restaurant business. It wholly owns a Chinese restaurant known as Jin Shan Lou and holds an indirect interest in a Japanese restaurant known as Hide Yamamoto. Both of these restaurants are at the Marina Bay Sands (‘MBS’). The genesis of NCPL and its business model must be briefly explained to provide context for the parties' arguments.

3 Sometime in late 2007 or early 2008, Richard, Yeoh and Wong were in talks with two Japanese individuals, Junichiro Yamada and Yamamoto Hidemasa (‘the Japanese investors’), on the possibility of setting up a Japanese restaurant at MBS. Wong had been pursuing the possibility of leasing a unit at MBS for this purpose. This bore fruit in April 2009 when MBS offered a lease to NCPL (‘the first lease’) for the operation of a Japanese restaurant. NCPL was at that time a shell company with a paid-up capital of $2, and its sole shareholder was a company known as Mataban Development Pte Ltd. Mataban was wholly owned by Wong, who in turn held 45% of the shares on trust for Phuah. Because MBS required that NCPL's share capital be increased to $500,000, Wong arranged for Mataban to inject the necessary funds into NCPL in September 2009. Thereafter, NCPL had a total of 500,000 shares with a value of $1 each.

4 Two subsidiary companies of NCPL were then incorporated, Next Capital Holdings Pte Ltd (‘NCHL’) and Next Capital JV Pte Ltd (‘NCJV’). NCPL held 50% of NCHL's shares, with the remaining 50% held by the Japanese investors. NCHL in turn owned 10.2% of NCJV, with the remainder of the shares held by a broader set of investors. It was NCJV that actually operated Hide...

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