Yong Khong Yoong Mark and others v Ting Choon Meng and another

• Jurisdiction: Singapore
• Judge: Belinda Ang Saw Ean JAD
• Judgment Date: 18 May 2022
• Neutral Citation: [2022] SGHC(A) 21
• Citation: [2022] SGHC(A) 21
• Docket Number: Civil Appeal No 121 of 2021
• Published date: 21 May 2022
• Year: 2022
• Plaintiff Counsel: Nair Suresh Sukumaran and Bhatt Chantik Jayesh (PK Wong & Nair LLC)
• Defendant Counsel: Kesavan Nair and Melissa Leong (Bayfront Law LLC)
• Subject Matter: Contract,Misrepresentation,Fraudulent,Negligent,Inducement,Tort,Fraud and deceit,Negligent misrepresentation,Conspiracy,Unlawful means conspiracy
• Hearing Date: 18 May 2022
• Court: High Court Appellate Division (Singapore)

Belinda Ang Saw Ean JAD (delivering the judgment of the court ex tempore): Introduction

AD/CA 121/2021 (“AD/CA 121”) is an appeal by the appellants, Yong Khong Yoong Mark (“Mr Yong”), Emily Hwang Mei Chen (“Ms Hwang”) and Medivice Investment Limited (“Medivice”), against the High Court judge’s (the “Judge”) decision in Yong Khong Yoong Mark and others v Ting Choon Meng and another [2021] SGHC 246 (“the Judgment”) to dismiss their claims against the respondents, Ting Choon Meng (“Dr Ting”) and Chua Ngak Hwee (“Mr Chua”), in misrepresentation and unlawful means conspiracy.

The facts of this case have been comprehensively set out in the Judgment at [6] to [44]. We therefore only summarise the salient facts relevant to this appeal. The appellants claimed that they were induced by the respondents’ misrepresentations to make several loans to HealthSTATS International Pte Ltd (“Healthstats International”) from January to July 2016 amounting to $2.5m and to enter into a subscription agreement in August 2016 (the “Subscription Agreement”) for the sum of $5m. The sum of $2.5m loaned to Healthstats International formed part of the consideration for the Subscription Agreement. The Subscription Agreement was entered into on 12 August 2016 between the second appellant, Ms Hwang, and Healthstats International.

Under the Subscription Agreement, Healthstats International issued approximately 3.2m new shares to Medivice, the third appellant (as the second appellant’s nominee) for a total consideration of $5m. The appellants principally alleged that, between September 2015 and February 2016,¹ the respondents fraudulently or negligently made the following representations (“Representations”): that all of Healthstats International’s products, in particular the BPro G2 and the CasPro devices, had obtained the necessary regulatory approvals from Singapore’s Health Sciences Authority, the US’ Food and Drug Administration (the “FDA”) and the European Union’s (“EU”) Conformité Européenne (the “Regulatory Representation”); that $18m of sales had been booked for 2016 and another $38.2m of sales had been booked for 2017 (the “Revenue Representation”); and that Healthstats International was to launch the BPro G3 in the second quarter of 2016 (the “Product Representation”).

The Judge dismissed all of the appellants’ claims against the respondents. The Judge found in one respect that the Regulatory Representation was falsely made, namely the respondents represented that the BPro G2 had regulatory approval from the FDA when it did not. The Judge did not find that the Regulatory Representation in respect of the CasPro was falsely made because there was CFDA approval. The Judge also found that the Revenue Representation and Product Representation were statements of future intention and were not actionable representations. Finally, the Judge found that even if all the Representations were falsely made, the appellants had not shown that the Representations had played a real and substantial role in inducing them to make the loans or entering into the Subscription Agreement.

In AD/CA 121, the appellants appeal against the whole of the Judge’s decision. In this appeal, the law in relation to the tort of misrepresentation is not disputed by the parties. After carefully considering the parties’ submissions, we dismiss AD/CA 121 for the reasons set out below.

Our decision

The appellants’ pleaded case is that the Representations made between September 2015 and February 2016 induced them to enter into the Subscription Agreement in August 2016. The burden lies on the appellants to show that the Representations were continuing at the time of entering into the Subscription Agreement. However, in our judgment, the evidence of the state of affairs at that time shows that the Representations were not in play.

It is crucial to set out the events following the making of the Representations to the entering of the Subscription Agreement. On 2 December 2015, Mr Yong executed a letter of intent on behalf of one of his investment vehicles, Uncharted Holdings Limited (“Uncharted”), evincing his intention to purchase shares in Healthstats International for about $27m. By this time, Healthstats International had entered into a joint venture with Winsan (Shanghai) Medical Science and Technology Co Ltd (“Winsan”) through HealthSTATS Technology (SIP) Co Ltd (“Healthstats China”). Under this arrangement, Healthstats International entered into a purchase agreement dated 13 August 2015 (the “First China Contract”) and a purchase agreement dated 26 October 2015 (the “Second China Contract”) with Healthstats China (collectively, the “China Contracts”) under which Healthstats China was to purchase $5m worth of BPro G2 devices and accessories and $52.785m worth of BPro G2, BPro G3 and CasPro devices and accessories from Healthstats International respectively.

From 8 January 2016 to 8 April 2016, Uncharted commissioned an extensive due diligence process involving DLA Piper UK LLP (“DLA Piper”), KPMG Services Pte Ltd and Baker & McKenzie, Wong & Leow. Mr Yong also approached Mr John Sheng (“Mr Sheng”), a partner in a law firm based in Shanghai, to look into Winsan and Healthstats China, on his behalf. Following the results of the due diligence, Uncharted decided not to proceed with the $27m investment. In its initial Notice of Termination dated 25 April 2016, it merely stated that it was of the view that due diligence had not been completed to its satisfaction in its sole opinion. Following a discussion between Mr Yong and Dr Ting, Mr Yong agreed to issue another notice and this time he clarified in an e-mail dated 26 April 2016 (at 5.41pm) to Dr Ting that Uncharted’s main concern was that Winsan seemed financially unsound and Winsan and Healthstats China had several issues. Mr Yong wrote that he was not comfortable with Healthstats China. He even recommended to Dr Ting to consider carrying out a full independent audit on Healthstats China. In his opinion, the orders of $5m for 2015 and the commitment for 2016 and 2017 under the China Contracts were not likely to be fulfilled.

Mr Yong had informed Dr Ting that Unchartered had commissioned the extensive due diligence process on Healthstats International, the patents and Healthstats China. This would have made clear Mr Yong’s intention to verify the accuracy of the Representations. Save for concerns relating to Healthstats China and Winsan, Mr Yong clarified with Dr Ting that Uncharted was fine with the results of the due diligence on Healthstats International and the patents. In the words of Mr Yong, Uncharted “loved” Healthstats International’s products and was still very interested in investing but not at the current valuation.

Further, Mr Yong had already brought in Mr Joshua Soh (“Mr Soh”)² as Chief Executive Officer of Healthstats International with the primary role of changing the sales-based model to a service-based model since March 2016.³ The service-based model for the BPro G2 is implemented by giving the device to clinical professionals for free with a fee charged per use (instead of selling the device) and is expected to increase profitability and allow potential penetration of other markets like the US. Dr Ting testified that Mr Yong had explained to him that the implementation of the service-based model in the US would be far more lucrative than the Second China Contract.⁴ Even after Unchartered withdrew from making the $27m investment, Mr Soh continued to be Mr Yong’s nominee in Healthstats International until April 2017.

Considering this crucial context, the crux of this appeal turns on why the appellants nevertheless decided to enter into the Subscription Agreement in August 2016 after Uncharted withdrew from the $27m investment. While the appellants now assert that it was the Representations that induced them to enter into the Subscription Agreement, Mr Yong’s own evidence in his affidavit of evidence-in-chief (“AEIC”) contradicts this and tells a different story. In our view, the documentary evidence including his AEIC coheres with the state...