Yeow Chern Lean v Neo Kok Eng and Another

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 26 June 2009
• Neutral Citation: [2009] SGCA 27
• Docket Number: Civil Appeals Nos 42, 43, 44, 45 and 157 of 2008
• Date: 26 June 2009
• Published date: 30 June 2009
• Year: 2009
• Plaintiff Counsel: Edmund Kronenburg, Leong Kit Wan and Joan Sim (Tan Peng Chin LLC)
• Citation: [2009] SGCA 27
• Defendant Counsel: Philip Ling and Hwa Hoong Luan (Wong Tan & Molly Lim LLC)
• Court: Court of Appeal (Singapore)
• Subject Matter: Whether claimant had locus standi to bring claim to recover proceeds of cheques he had issued as loan to another party,Whether stipulation of condition as to use of cheque entailed conditional delivery of cheque,Conversion,Money had and received,Whether claim for restitution of a tort could be sustained even though claimant had failed to establish the tort,Conditional,Tort,Bills of Exchange and Other Negotiable Instruments,Restitution,Delivery

26 June 2009 Judgment reserved.

Chao Hick Tin JA (delivering the judgment of the court):

Introduction

1 This is an appeal by Yeow Chern Lean (the defendant in Suit No 136 of 2007/L and Suit No 137 of 2007/Q below) against the decision of the trial judge (“the Judge”) in Neo Kok Eng v Yeow Chern Lean and another suit [2008] SGHC 151 (“GD”). The two respondents in this case are Neo Kok Eng (the plaintiff in Suit No 136 of 2007/L) and Chip Hup Hup Kee Construction Pte Ltd (the plaintiff in Suit No 137 of 2007/Q). We shall refer to them as “Neo” and “the Company” respectively.

Background

2 The four protagonists in this case are the Company; Neo who is managing-director and majority shareholder of Chip Hup Holdings Pte Ltd which wholly owns the Company; one Lim Leong Huat (“Lim”) who was the Company’s general manager, project director and executive director before his employment was terminated on 29 November 2006; and the appellant who was the Company’s general manager before his employment was terminated on 1 February 2007.

3 Although the appellant shared one of Lim’s titles, that of general manager, it was not disputed that he was Lim’s subordinate and took instructions from Lim. As for Neo and Lim, they enjoyed a close relationship before they fell out. Apart from being an employee of the Company, Lim was also the majority shareholder and, effectively, the owner of another company, AZ Associates Pte Ltd (“AZ Associates”). Neo and Lim’s close relationship was reflected in the way the Company and AZ Associates (collectively “the two companies”) were then being run. The two companies were both engaged in the building and construction business and shared the same telephone numbers, office premises and employees such as the accounting and administrative staff.

Suit No 136 of 2007/L

4 Suit No 136 of 2007/L was precipitated by an action, Suit No 779 of 2006 (“Suit 779”), brought by Lim on 21 November 2006 against the Company. In that suit, Lim claimed for the return of $7,205,000 which he alleged was the total amount of interest-free loans he had extended, at Neo’s request, to the Company between July 2003 and September 2006. As a result, the Company investigated this claim and discovered that Lim had misappropriated various sums of money from the Company. In all, $6,083,741.06 worth of cheques which Neo had handed to Lim for the Company’s use were allegedly diverted in the following ways: (a) in cash by Lim; (b) credited into the bank accounts of Lim, his wife or AZ Associates; or (c) credited into the Company’s bank account but recorded as loans made by Lim or AZ Associates, to the Company.

5 Pursuant to these discoveries, the Company denied Lim’s claims in Suit 779 and counterclaimed against Lim, his wife and AZ Associates for the misappropriated monies. The Company obtained summary judgment against Lim for the sums of $347,030 and $426,740. Lim appealed against this summary judgment by way of Civil Appeal No 142 of 2007. In the meantime, pending the determination of the appeal, Lim paid up the two sums pursuant to the judgment. At the hearing of the appeal on 11 July 2008, the judgment against Lim was set aside by consent but on the condition that the Company could retain the two sums and be at liberty to deal with them. It was also agreed that in the event that Lim and/or his wife succeeded in defending the counterclaim in Suit 779, the two sums would be refunded on such terms as the trial judge might deem fit to impose.

6 Following from the Company’s investigations, Neo decided to procure, from United Overseas Bank Ltd, cheque images of the various personal cheques which he had handed over to Lim for the purposes of the Company. He discovered that two cheques, cheque number 378730 for $80,000 (“the $80,000 cheque) and cheque number 634684 for $100,000 (“the $100,000 cheque”), were cashed by the appellant on 22 November 2000 and 4 April 2002 respectively. On the $80,000 cheque, against the “payee” column, the defendant’s name was inserted and on the $100,000 cheque against the same column the word “cash” was written. Neo recognised that those insertions, along with the date and the amount written on each cheque, were in Lim’s handwriting.

7 On 29 November 2006, while clearing out the office which Lim occupied, an invoice issued by AZ Associates dated 1 April 2003 was discovered. This invoice was issued by AZ Associates to the appellant in respect of the third progress payment for the construction of a house at No 189 Eng Kong Garden, Singapore 599287 (“the Eng Kong property”). The words “PAID ChqNo” were stamped on the invoice and the words “10/3/03 UOB 788740” were handwritten alongside it. It transpired that UOB 788740 was a cheque for $260,000 which Neo had issued and handed over to Lim which Lim had subsequently handed over to AZ Associates. The construction of the house on the Eng Kong property was subsequently completed. This property, together with the house erected thereon, has since been sold.

8 Having made these discoveries, Neo instituted Suit No 136 of 2007/L (“Suit 136”) to recover $440,000, being the total proceeds of the three cheques. All the three cheques were effectively bearer cheques as the word “bearer” appearing on the cheques was not crossed out. The action in Suit 136 was based on conversion and, in the alternative, for moneys had and received. In addition, Neo sought a declaration that the sale proceeds of the Eng Kong property was held by the appellant on trust for Neo and the appellant in the proportion of their contributions towards the purchase price (including the cost of constructing the house thereon) of the Eng Kong property, or, in such proportions as the court may determine.

Suit No 137 of 2007/Q

9 In Suit No 137 of 2007/Q, the Company brought claims against the appellant (a) for $306,580, being overpayment made to him in respect of his salary for seven years between October 1998 and October 2006; (b) for breach of fiduciary duties; and (c) for $5,320, being overpayment made to him in respect of his salary for November 2006. The first two claims were subsequently discontinued. With regard to the third claim, which was based on mistake, the Company relied on its accounts staff, Khoo Choon Yean (“Khoo”), who had averred that she had overpaid the appellant the sum of $5,320 because she thought his salary for November 2006 was $11,920 when it should have been $6,600 per month. In respect of the sum of $6,600, we should clarify that the documentary evidence showed that the appellant’s salary was, in fact, $6,800 per month and not $6,600.

10 Furthermore, in Suit 137, the appellant had also counterclaimed for his salary and allowance for the period of 1 December 2006 to 7 March 2007. He alleged that he had tendered his resignation from the Company on 7 December 2006 by giving the requisite three months notice and his last day of employment would have been on 7 March 2007. He claimed that the Company had, in breach of the terms of his employment agreement, dismissed him earlier on 1 February 2007.

11 Accordingly, the appellant sought to claim for his salary, transport and meal allowances up to 7 March 2007. Taking into account his receipt of the $11,920 and another $2,000 from the Company on 1 February 2007 as well as CPF contributions, he claims a remainder of $10,990.64 from the Company.

12 On the Company’s part, the reason why it had sought to terminate the appellant’s employment on 1 February 2007 was because on that day Neo had confronted the appellant regarding the cheques. Neo wanted to know why the proceeds of the $80,000 and $100,000 cheques went to the appellant and the proceeds of the $260,000 cheque, to the appellant’s third progress payment for the construction of the house at the Eng Kong property. When the appellant gave no satisfactory answers to his queries, Neo terminated his employment forthwith. This conversation between Neo and the appellant was secretly recorded by the appellant and transcribed for the purposes of the trial.

The Decision below

13 In the course of the proceeding in the High Court, four interlocutory applications were made by the parties. The decisions of the court below on these applications are the subject of Civil Appeals No 42, 43, 44 and 45 of 2008.

The Interlocutory Applications

14 The first interlocutory applications pertained to the appellant’s attempt to introduce evidence to prove that Neo’s cheques were not issued as loans to the Company but were actually repayments to Lim for monies that Neo owed Lim. In his affidavit of evidence-in-chief (“AEIC”), Lim testified that Neo owed him money and had issued the three cheques to him as repayment. By way of Summons No 980 of 2008/C filed on 3 March 2008, Neo applied to strike out these paragraphs in Lim’s AEIC (“the Striking-Out application”). Neo argued that the offending paragraphs were irrelevant because they went towards proving facts which were not part of the appellant’s pleaded case.

15 The very next day, on 4 March 2008, the appellant, by way of Summons No 1003 of 2008/W, sought leave to file a Rejoinder (“the Rejoinder application”) to achieve two things: first, to plead the facts alleged in the offending paragraphs in Lim’s AEIC so as to prevent them from being struck out; and second, to introduce a defence against Neo’s claim in conversion that the claim must fail because Neo had no right of possession of the cheques after he had handed them over to Lim. In the same summons, the appellant also applied to call the Company’s auditor Lim Kok Khuang as an additional witness to give evidence on whether Neo consistently took the position that the cheques handed to Lim were loans to the Company.

16 The Judge refused the appellant leave to file the Rejoinder for two reasons: first, Neo’s Reply did not raise new allegations which had to be addressed by way of the proposed Rejoinder; and second, the appellant provided no satisfactory explanation as to why he was so late in...