Yip Fook Chong (alias Yip Ronald) and another v Loy Wei Ezekiel and another

• Jurisdiction: Singapore
• Judge: Chan Seng Onn J
• Judgment Date: 28 April 2020
• Neutral Citation: [2020] SGHC 84
• Court: High Court (Singapore)
• Docket Number: Suit No 703 of 2017
• Year: 2020
• Published date: 01 May 2020
• Hearing Date: 03 October 2019,08 October 2019,02 October 2019,12 March 2020,01 October 2019,04 October 2019,09 October 2019
• Plaintiff Counsel: Yeoh Oon Weng Vincent (Malkin & Maxwell LLP)
• Defendant Counsel: Nicolas Tang Tze Hao and Jolene Gwee Jia-Min (Farallon Law Corporation)
• Subject Matter: Equity,Fiduciary relationships,Duties,Restitution,Unjust enrichment,Unconscionability
• Citation: [2020] SGHC 84

Chan Seng Onn J: Introduction

The case pertains to an alleged oral agreement (the “Agreement”) between a 73-year-old man (the first plaintiff) who suffers from post-ICU delirium and a 22-year-old man (the first defendant) gone awry. The first plaintiff’s property (the “Telok Kurau Property”) was mortgaged to Coutts & Co Ltd (“Coutts”) as security for a loan granted by Coutts to the first plaintiff, who owed an outstanding loan of $2.625m to Coutts. The second plaintiff helped the first plaintiff source for a replacement funder due to pressure from Coutts for the first plaintiff to move out of his property.

The first plaintiff and first defendant are co-directors and shareholders of the second plaintiff. The second plaintiff entered into a $4m loan with a third party funder, Ethoz Capital Ltd (“Ethoz”). The said loan was secured over the Telok Kurau Property and personally guaranteed by the first plaintiff and first defendant jointly and severally. The $4m was used to discharge the outstanding mortgage of the sum $2.625m and the advance interest to Ethoz for $281,500. The balance sum of $1,268,500 was deposited into the second plaintiff’s bank account.

The first defendant transferred the balance sum into the second defendant’s bank account and subsequently into his own personal bank account. The balance sum is the subject of the parties’ dispute. The plaintiffs claim that (a) the first defendant’s use of the balance sum was in breach of his fiduciary duty and was unconscionable; and (b) the defendants were unjustly enriched. The defendants’ defence is that the use of the balance sum was in accordance with the Agreement entered into for investment purposes on behalf of the second plaintiff company.

Facts The parties

At the material time in 2016, the first plaintiff, Mr Yip Fook Chong @ Yip Ronald (“Yip”) was 73 years old. Yip has a Bachelor of Science (Engineering) degree and a Master of Science (Mechanical Engineering) degree.¹ After obtaining work experience managing offshore oil and gas underwater engineering projects for major multinational companies, Yip started his own business building and selling barges and tugboats under the second plaintiff company, Yip Holdings Pte Ltd (“Yip Holdings”).² Yip retired around 2010 and since he was the sole director and shareholder of Yip Holdings, the company ceased doing business and became dormant.³

The first defendant, Mr Loy Wei Ezekiel (“Loy”) was 22 years old at the material time in 2016 and started serving his National Service on 17 May 2016.⁴ Loy identifies himself as an entrepreneur and a businessman.⁵

Yip and Loy are currently co-directors and shareholders of Yip Holdings. Loy remains the majority shareholder with 105,000 shares while Yip holds the remaining 95,000 shares of the company.⁶ This is the current status of Yip Holdings’ shareholding till date. However, this was not always the case.

Yip was previously the sole director and sole shareholder of Yip Holdings. On or around 20 April 2016, Loy was appointed as a director Yip Holdings (“the Appointment”).⁷ Between 20 June 2016 and 21 June 2016, 105,000 shares of Yip Holdings were transferred from Yip to Loy (“the Share Transfer”).⁸ The notifications of the Appointment and the Share Transfer were lodged with ACRA from 22 to 23 September 2016.⁹ However the circumstances under which the Appointment and Share Transfer were made are disputed by the parties.

Loy is also the sole director and shareholder of the second defendant company, Property Street Pte Ltd (“Property Street Pte Ltd”), which was formerly known as Yip & Loy Pte Ltd.¹⁰

Telok Kurau Property, Coutts Outstanding Mortgage and the Ethoz Loan

Yip owned a property (ie, the Telok Kurau Property) and lives alone in the Telok Kurau Property as he is divorced and his only daughter (“Li-Fen”) worked overseas.¹¹ At times, an unidentified lady from the Philippines visited Yip at his place, who Loy claims to be his mistress.¹²

The Telok Kurau Property was mortgaged to Coutts as security for a loan granted by Coutts to Yip.¹³ As Coutts was winding down their operations, it was pressuring Yip to pay back the outstanding loan of $2,625,000 to them (“Outstanding Mortgage”). This led Yip to source for another funder to pay off his loan with Coutts.¹⁴

The subject matter of the plaintiffs’ case is a sum of $1,268,500 which is the balance of a $4m loan borrowed by Yip Holdings from a funder, Ethoz. This $4m loan will be referred to as the “Ethoz Loan” and sum of $1,268,500 will be referred to as the “Balance Sum”. The Balance Sum was deposited into Yip Holding’s bank account and subsequently transferred into Property Street Pte Ltd’s bank account for further use, which is currently a matter of dispute between the parties.

Yip and Loy’s business relationship The first meeting

Sometime around December 2015 to 2016, Yip and Loy became acquainted.¹⁵ Yip’s testimony was that Loy befriended him in a coffee shop opposite 106 Rangoon Road.¹⁶ According to Loy, it was through his broker, named Ms Jan Lee (“Jan”), who connected “like-minded investors to businessmen who could do business together”.¹⁷ A first meeting was conducted at the coffeeshop along Rangoon Road between Loy, Yip, Jan and two other individuals Mr Alex Tan (“Alex”), who was allegedly Yip’s broker, and Mr Ronnie Low (“Ronnie”), who was Yip’s project manager for an upcoming real estate redevelopment project.¹⁸ This redevelopment project will be referred to as the “Rangoon Redevelopment Project”.

On the other hand, Yip does not recall ever knowing either Alex or Ronnie at trial.¹⁹

Rangoon Redevelopment Project (according to Loy)

Loy testified that Jan had informed him of a potential business partner (ie, Yip) seeking for investors to join in on his real estate redevelopment plans. Requiring funds of approximately $2.625m, this potential business partner was seeking to inject money into his property located at Telok Kurau area in return for a portion of the house and rights to redevelop a three-storey property located at the Rangoon Road area.²⁰

Yip allegedly told them that they could redevelop the building located at 102, 104 and 106 Rangoon Road (the “Rangoon Properties”), all of which were units that Yip allegedly owned, as Yip wanted to honour his father who was the previous developer of the said Properties.²¹ However, Yip was unable to proceed with the redevelopment of the Rangoon Properties as he had to first raise funds to discharge an outstanding mortgage of $2.625m on his Telok Kurau Property due to Coutts.²² At the end of the first meeting, Loy informed Yip that there was potential for the Rangoon Redevelopment Project as the Rangoon Road Properties were old, run down and underdeveloped.²³ Loy proposed to Yip that he could get together some of his Malaysian business partners, namely Mr Edwin Wong (“Datok Wong”) and Tunku Mukhri A’lwi (“Tunku”), to join them in their meeting due to their “strong expertise in real estate development in Malaysia”.²⁴

Sometime in December 2015, Jan, Alex, Ronnie, Yip, Datok Wong and Tunku met at the same coffee shop and discussed the possibility of incorporating a new company in Singapore for the purposes of real estate development.²⁵ Thereafter, Yip brought the parties for a tour of the Rangoon Road Properties save for one unit, which Yip informed them was tenanted out and thus he was unable to let them inside.²⁶ After the site visit, Yip allegedly confirmed that the Rangoon Road Properties belonged to him.²⁷ The fact that Yip allegedly owned all of the Rangoon Properties is in fact untrue (see below at [123]).

Yip and Loy then decided to redevelop the Rangoon Properties into a boutique condominium or tear them down completely and rebuild them as a hotel (ie, the Rangoon Redevelopment Project).²⁸ However, the Outstanding Mortgage owed to Coutts was an obstacle to the Rangoon Redevelopment Project.²⁹

Loy testified that Yip and Loy decided that it was better to deal directly with each other for the Rangoon Redevelopment Project instead of going through their respective brokers, Alex and Jan, as they were looking to earn the commission.³⁰ They hence decided to only involve Alex and Jan once the Rangoon Redevelopment Project had completed for the purposes of marketing the new development.³¹

This was how the business relationship between Yip and Loy allegedly started.³²

Subsequent meetings

Thereafter, most of their business meetings involving the Rangoon Redevelopment Project took place at the Telok Kurau Property.³³ These meetings would usually last a few hours and out of convenience, Yip duplicated a set of house keys for Loy and allowed Loy to stay over at the Telok Kurau Property after the meetings, if he so wished.³⁴

The Agreement

I now turn to summarise the parties’ position on the alleged Agreement and its terms, which is a key contention of the present dispute.

The defendants’ position

It is the defendants’ version of events that by way of oral discussions from November 2015 to April 2016, Yip and Loy discussed the following terms:³⁵ Yip represented that he owned the property at 102 Rangoon Road (“102 Rangoon Road Property”); Yip’s Telok Kurau Property had an outstanding mortgage of $2,625,000 due to Coutts; Loy was to come up with a plan to assist Yip to discharge his mortgage; Yip and Loy agreed that should Loy successfully assist Yip in discharging the outstanding mortgage due to Coutts, Yip would grant the right to re-develop the 102 Rangoon Road Property to any of Loy's companies.

By way of verbal discussions between Yip and Loy over the period of April to September 2016, Yip and Loy entered into an agreement orally (ie, the Agreement referred to in [1]) with the following terms:³⁶ Yip would transfer 105,000 shares of Yip Holdings to Loy. Both Yip and Loy would be shareholders of Yip Holdings. Yip would also appoint Loy as a director of Yip Holdings. In...