Yong Ching See v Lee Kah Choo Karen

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu J
• Judgment Date: 08 May 2008
• Neutral Citation: [2008] SGHC 68
• Date: 08 May 2008
• Subject Matter: Whether money advanced by way of loan,Presumed resulting trusts,Trusts,Whether transferor or contributor having no intention to retain any beneficial interest in property,Resulting trusts
• Docket Number: Suit No 76 of 2007
• Published date: 16 May 2008
• Defendant Counsel: Daniel Koh and Wendy Lin (Rajah & Tann LLP)
• Court: High Court (Singapore)
• Plaintiff Counsel: Philip Jeyaretnam SC and Jeanette Lim (Rodyk & Davidson LLP)

8 May 2008 Judgment reserved.

Lai Siu Chiu J:

1 This action is a claim by Yong Ching See ("the plaintiff") against Lee Kah Choo Karen ("the defendant") for the transfer to the plaintiff of 175,000 shares in a company Alsecure International Pte Ltd ("Alsecure") registered in the defendant's name, on the basis that the defendant held those shares on trust for the plaintiff.

2 By way of preliminary observation, two highly inconsistent versions of the same facts emerged as both parties crossed swords during the trial. Given that the events that transpired leading up to the dispute were relatively protracted in nature, it would be apposite to first set out the undisputed facts before delving into the plaintiff's and defendant's versions.

The facts

3 From the mid-1980s, the defendant had been working in the ironmongery industry and was the Vice-President of Sales and Marketing at Assa Abloy Pte Ltd ("Assa Abloy"). Under a restructuring exercise in 2004, the defendant was retrenched and despite attempts at negotiations with the management, she left the employment of Assa Abloy sometime at the end of March 2004.

4 Since 1958, the plaintiff had been a director of Yong Tai Loong Pte Ltd ("Yong Tai Loong") from which position he retired in 2001. Yong Tai Loong developed a close business relationship with another company, Tai Tong Industrial Suppliers Pte Ltd, run by Lily Ling Ker Ing ("Lily") and her brother. In the course of business, the plaintiff developed a closeness to Lily and subsequent to his retirement at Yong Tai Loong, the plaintiff continued to maintain a close relationship with Lily who lived a few lanes from his home and who accompanied him on visits to the doctor; she became by all accounts, the plaintiff’s surrogate daughter.

5 Sometime in 2004, the plaintiff first entertained the possibility of assisting his son Yong Boon Wei ("Boon Wei") to set up the latter’s own company in Singapore, to be called Sinca. At Lily's suggestion, the plaintiff provided financial support for this business venture despite his scepticism of his son's ability to run his own business and their strained relations over the years. However, Boon Wei was unhappy that the Chairman of Sinca would be the plaintiff and accordingly, the idea for the business venture of Sinca fell through. Nonetheless, this was not the end of Boon Wei's efforts to set up his own company. On behalf of Boon Wei, Lily approached the plaintiff to provide financial support again. Given his age (69 then), the plaintiff was not keen on taking an interventionist role in the management of a new company and steering the direction of the company. In his affidavit evidence, the plaintiff revealed that at this point, he "did not want to be named as a shareholder or a director of the new company that was to be set up as [he] did not want to be asked to attend to matters relating to the company". The administrative matters of this new company to be named Alsecure were therefore, managed by Boon Wei and Lily with the latter providing regular updates to the plaintiff.

6 Around August 2004, the defendant was invited to lunch by Lily who was keen on engaging the defendant’s help in the running of Alsecure, capitalising on her expertise in the private sector. Both had known each other in their prior employment. The lunch resulted in a second meeting on 11 September 2004 at the Legends Country Club, Fort Canning, where Lily and Boon Wei continued to persuade the defendant to join them in setting up Alsecure. The defendant expressed scepticism over the setting up of Alsecure as it would require a large sum of capital. Lily assured the defendant that the plaintiff would lend her money to finance the operations of Alsecure. Due to the difference in pay between her previous position at Assa Abloy, the defendant alleged that Lily and Boon Wei enticed her to join Alsecure by dangling the carrot that in lieu of drawing a better salary, she would be given one-third share of the business. Lily on the other hand claimed that on the issue of salary, it was in fact the defendant who suggested that she should draw a salary of $8,000 and after further negotiations, it was agreed that the defendant would be paid $7,000 a month. Lily further claimed that the defendant did not mention the salary she had drawn at Assa Abloy. Second, Lily claimed that the defendant also offered to raise $20,000 at this meeting to invest in Alsecure if she could be made a shareholder. However, the defendant was unable to raise the money subsequently as her husband needed the funds for a new business he had started. This was to be the first of many differing versions of events between the parties. What is clear is that on 23 September 2004, Alsecure was eventually incorporated, with the defendant and Boon Wei holding one share each.

7 In October 2004, differences between Boon Wei and Lily erupted. Boon Wei wanted to deny Lily's one-third entitlement to the shares in Alsecure so Lily sought the help of the defendant and the defendant's husband's in verifying that she owned one-third of the company. The plaintiff agreed to help Lily in the dispute with Boon Wei, to the extent of forcing Boon Wei out of Alsecure. Accordingly, on 2 November 2004, the plaintiff attended at the office of ACIES Law Corporation (the defendant’s lawyers) to sign a statement ("the plaintiff’s statement") so that Lily could use it against Boon Wei. As is often the case, the events that transpired at this meeting were also of some dispute in these proceedings - while the defendant alleged that the plaintiff did not claim he was the true owner of the company and in fact emphasised that he had lent money to Lily so that the company was owned equally by three parties viz Boon Wei, Lily and the defendant, the plaintiff contended that he did not make any representation, promise or assurance that he would pay for the defendant to have shares in Alsecure in her own right or for her own benefit. On an express reading of the plaintiff’s statement, I noted that the plaintiff indicated he knew of the agreement between the Boon Wei and Lily and had "no expectations that any of these monies would be returned to [him] as [he] had helped Lily purely out of goodwill and friendship". On 3 November 2004, Boon Wei resigned as Chairman and Director of Alsecure and transferred his shares to Lily who stepped in to become the Chairwoman of Alsecure.

8 In the ensuing period, the plaintiff continued to transfer money to Lily and Alsecure. This included an initial sum of $200,000 to Lily to increase the paid-up capital of Alsecure. On 16 November 2004, with the sum of $200,000, 199,998 shares were issued to Lily who assured the defendant that the plaintiff would continue to lend her sums of money which she would then use to increase the paid-up capital of Alsecure, based on the understanding that the defendant was entitled to one-third share of Alsecure. The plaintiff therefore lent Lily a second sum of $300,000 to increase the paid-up capital of Alsecure. All in all, in the period 12 November 2004 to 16 December 2005, the plaintiff transferred about $1m to Alsecure.

9 The sequence of events that took place subsequent to the aforementioned events were also of considerable dispute between the opposing camps. So as to place the dispute in its proper context, I propose to set out each party's version of what happened next seriatim, beginning first with the plaintiff's version of events.

The plaintiff's version

10 Around February 2005, the plaintiff alleged that Lily confided in him that the defendant had expressed unhappiness at holding only a $1 share in Alsecure. The defendant was presumably embarrassed by the fact that she had only a single share even though she was a director of the company and had made continuous attempts to lobby for her shareholding in Alsecure to be increased. In the plaintiff's statement of claim, the plaintiff further elaborated that the defendant requested Lily to seek his permission to increase her shareholding, on the strict understanding that the defendant would be holding the said shares on trust for the plaintiff. As such, his response to Lily was he needed time to consider if he would increase the amount of shares the defendant would have, having invested about $500,000 into Alsecure in total as paid-up capital at this point. In late February 2005, the plaintiff finally agreed to allow some of the shares to be allotted to Karen, but on the condition that Lily, the defendant and himself would sign a document reflecting that he remained the true owner of the shares and that the defendant was a mere nominee holding such shares on trust for the plaintiff. Lily corroborated the plaintiff's testimony and stated that he had allowed her to allot 300,000 shares to be issued in her name and the defendant's name but held on his behalf. Lily further alleged that the defendant was cognisant of this arrangement. Pursuant to this arrangement, Lily prepared three copies of a Memorandum of Understanding, with two copies being on Alsecure's letterhead while the third copy was on plain paper.

11 According to Lily, on 2 March 2005, 174,999 shares were allotted to the defendant while 125,001 shares were allotted to herself on the understanding that the shares were "put in [the defendant's] name for appearances, and that they really belonged" to the plaintiff as the investor. On the following day, both the plaintiff and Lily recalled that the defendant signed all three copies of the Memorandum of Understanding dated 1 March 2005 ("the MOU") and Lily then handed one copy of the MOU which was on Alsecure's letterhead, to the defendant.

12 As a follow-up, on or about 8 March 2005, Lily claimed that the defendant passed her a draft MOU prepared by the defendant’s lawyers. This proposed draft MOU showed that the plaintiff's contribution was a loan to Lily and the defendant, instead of an investment. Lily asserted that she did not agree to...