Ching Chew Weng Paul, deceased, and others v Ching Pui Sim and others

Steven Chong J:

[1] In an earlier decision Ching Chew Weng Paul v Ching Pui Sim and others [2010] 2 SLR 76 (“the Judgment”), I described this case as “the unfortunate quest of the plaintiff to recover assets which his father, the late Ching Kwong Kuen (“KK Ching”) had intended to leave behind for him”. At the conclusion of the trial, the plaintiff substantially prevailed and the 1, 2 and 4 defendants were ordered to transfer various assets including shares in several companies back to the estate of KK Ching under which the plaintiff was the sole beneficiary. After the Judgment was delivered, the 5 to 9 defendants (ie the aunt and cousins of the plaintiff) representing the estate of the 2 defendant (who elected not to participate in the trial following the demise of the 2 defendant) filed a Notice of Appeal against the Judgment. The other defendants did not appeal. On 2 March 2010, I heard and dismissed the 5 to 9 defendants’ application to stay the execution of the Judgment against an undertaking from the estate of KK Ching not to transfer the shares pending the outcome of the appeal. Two days later, on 4 March 2010, the plaintiff, who was suffering from terminal cancer (unknown to me during the trial), passed away. On 19 April 2010 the appeal lapsed when the 5 to 9 defendants failed to file their Record of Appeal, Core Bundle and the Appellants’ Case altogether.

[2] Six months later, this unfortunate and somewhat tragic case was “resurrected” by the 5 to 9 defendants (who had then instructed a new set of solicitors). An application was filed on 9 September 2010 in this action to set aside the Judgment on the limited ground that the Judgment, insofar as it affects the estate of the 2 defendant, was procured by fraud. Recognising the issue of prejudice to the estate of the plaintiff in view of his untimely demise, the 5 to 9 defendants astutely steered away from alleging fraud directly against the plaintiff. Instead they directed the fraud accusation solely against another cousin, the 1 defendant, and submitted that the plaintiff’s evidence at the trial was entirely based on the evidence of the 1 defendant. I heard the application over 2 days and on 10 December 2010, I delivered my oral grounds in dismissing the application. I arrived at the firm conclusion that the “fresh” evidence raised by the 5 to 9 defendants did not even come close to establishing fraud. As the 5 to 9 defendants have since appealed against my decision, I now provide my full grounds for dismissing the application.

[3] This decision will examine the applicable principles to set aside a regular judgment purportedly procured by fraud, in particular, the ambit of the fraud exception, the degree of proof required to establish fraud and the relevance and necessity, if any, for the applicant to sufficiently explain the reasons for the absence from the trial and the delay in filing the application.

[4] The action was commenced by the plaintiff on 25 August 2008. Initially, each of the defendants (except the 1 defendant) was represented by different sets of solicitors and each of them filed their respective defences. In particular, the 2 defendant filed a bare denial which merely put the plaintiff to strict proof. Shortly after his defence was filed, the 2 defendant passed away on 21 October 2008. Thereafter, the plaintiff applied for the 5 to 9 defendants to be substituted as parties to continue the action against the 2 defendant’s estate.

[5] More than a year after the death of the 2 defendant, the trial of the action was eventually heard before me over four days on 2 to 4, and 6 November 2009. Despite being added as parties and being served with all the court papers, the 5 to 9 defendants elected not to participate in the proceedings at all. The plaintiff and all the other defendants testified at the trial.

[6] I delivered my decision on 4 December 2009. I found, inter alia, that the following assets were held on trust by the various defendants for the estate of KK Ching:

[1] defendant

[2] defendant

[4] defendant

[1] share in KK Holdings

[7] On 4 January 2010, a Notice of Appeal was filed by the 5 to 9 defendants. It should be noted that the appeal was filed within time. In tandem with the appeal, the 5 to 9 defendants also applied to stay the execution of the Judgment pending the outcome of the appeal. It is pertinent to highlight that the ground for the stay application was essentially the uncovering of “fresh” evidence which contradicted the findings in the Judgment. As explained above, the stay application was heard and dismissed by me on 2 March 2010. Shortly after the stay application was dismissed, the appeal lapsed. No attempt was made by the 5 to 9 defendants for extension of time to pursue the appeal.

[8] Some five months after the appeal had lapsed and some nine months after the Judgment was delivered, the 5 to 9 defendants on 9 September 2010 applied to set aside the Judgment insofar as it affects the 2 defendant’s estate.

[9] On 10 August 2010, the executors of the plaintiff’s Will were added as 2 and 3 plaintiffs to the action. Unless the context otherwise requires, all references to the plaintiff in this decision shall refer to Paul Ching Chew Weng.

[10] The application to set aside the Judgment was initially fixed before Chan J on 14 September 2010. During the hearing, Ms Deborah Barker representing the 5 to 9 defendants clarified that the application was made under O 35 r 2 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (“Rules of Court”) which empowers the court to set aside any judgment or order granted in the absence of a party. However, under O 35 r 2, such an application must be made within 14 days from the date of the judgment. As the Judgment was delivered on 4 December 2009, the application was out of time by almost nine months. Accordingly, Chan J directed the 5 to 9 defendants to file an application to extend time. Both applications were heard together before me. I will deal with the reasons proffered by the 5 to 9 defendants for their inordinate delay in filing the application as well as their absence from the trial separately below.

[11] In deciding whether to set aside a judgment after trial under O 35 r 2, the following factors are relevant (see Su Sh-Hsyu v Wee Yue Chew [2007] 3 SLR(R) 673 at [44]) (“Su Sh-Hsyu”):

[12] At the outset of the hearing, Ms Barker made clear that the application was based entirely on the premise that the Judgment was procured by actual fraud and the fraud accusation was directed solely at the 1 defendant. On this note, I will consider each of the above factors in turn.

[13] The Court of Appeal in Su Sh-Hsyu held that (at [44]), where judgment has been entered after trial in the defendant’s absence, the predominant consideration in deciding whether to set aside the judgment is the reason for the defendant’s absence. The authorities are clear that the burden is on the party who was absent to provide sufficiently cogent reasons to explain the absence from trial. As emphasised in Su Sh-Hsyu at [57], a Court is reluctant to set aside the judgment if the absence was deliberate and contumelious:

[14] It would seem from the authorities that absence from trial due to personal reasons or personal difficulties would not necessarily prevent the Court from finding that the absence was nonetheless deliberate. Such was the case in Shocked v Goldschmidt [1998] 1 All ER 372 (“Shocked”) where the applicant, a musician, was recording and touring around the world at the time when the trial took place. Although the applicant was informed in advance by her counsel of the trial date, she explained that she could not attend the trial as she was on tour, and was without a personal manager, a backing band, and money (see Shocked at p 375). The English Court of Appeal (at p 382) was unconvinced that these personal reasons could justify her absence from trial and observed that even with these personal difficulties, no explanation was provided for her failure to apply for an adjournment. No allegation of fraud was raised and in view of the applicant’s deliberate choice to be absent from trial, the English Court of Appeal decided to dismiss the application to set aside the judgment. In similar vein, the defendant in Lee Ngiap Pheng Tony v Cheong Ming Kiat (Zhang Minjie) (trading as Autohomme Automobiles) [2010] 4 SLR 831 (“Lee Ngiap Pheng”) explained that his absence from trial was because he was hounded by creditors, that he did not think that the trial would be fruitful and that he did not fully appreciate the necessity for his trial attendance. The Court held that these did not constitute valid reasons to explain his deliberate absence from the trial. The Court observed that unlike the case of Su Sh-Hsyu, no allegation of fraud was raised as a basis to set aside the judgment; and in view of the unsatisfactory attempts to explain the absence from trial, the Court decided against setting aside the judgment. Nevertheless, I must emphasise that there is no overriding principle that personal reasons or personal difficulties will never be accepted as valid reasons to explain the absence from the trial. A Court would be inclined to set aside the judgment where the personal reasons given, if accepted, could show that the absence from the trial was wholly innocent or due to mistake or unavoidable accident (see Su Sh-Hsyu at [57]).

[15] In the present case, there is no dispute that the 5 to 9 defendants were well aware of the trial dates. Despite so, they chose not to participate or even attend the trial. The 5 to 9 defendants explained that their absence from trial was due to certain subjective assumptions on their part. The 5 to 9 defendants made the following claims:

This was reiterated by the 6 defendant’s claim that:

In particular, the 6 defendant stated the following:

[16] In my view, the above reasons were completely unconvincing. The assertion that they trusted the plaintiff to conduct the matter in a just and reasonable manner was disingenuous as it runs contrary to the complaints by the 6 defendant about the plaintiff’s allegedly unreasonable behaviour:

[17] In view of such significant insinuations of unreasonable behaviour on the plaintiff’s part before the trial, it was plainly disingenuous of the 5 to 9 defendants to claim that they had trusted the plaintiff to conduct the proceedings in a just and reasonable manner.

[18] Even more pertinently, the 5 to 9 defendants’ explanation that there was no reason to suspect that the plaintiff or the 1 defendant would withhold information is no excuse for being absent from trial. It is common ground that the writ with the Statement of Claim was served on the 5 to 9 defendants in February 2009 after they were added as parties to the action pursuant to an order for substituted service following unsuccessful attempts at personal service. It was also undisputed that copies of all subsequent pleadings were duly served on the 5 to 9 defendants. From the pleadings, the plaintiff’s and 1 defendant’s Affidavits of Evidence in Chief (“AEIC”), the 5 to 9 defendants were fully aware of the evidence that was alleged against the 2 defendant from the outset. It is that same evidence which the 5 to 9 defendants have now alleged to be fraudulent. The 5 to 9 defendants could easily have adopted the same position to contest the trial. Accordingly, in the face of the pleadings and the AEICs of the plaintiff and the 1 defendant, the 5 to 9 defendants, based on their own case theory, could not have reasonably believed that the plaintiff would conduct the trial in a fair and reasonable manner. Therefore, they had every reason to contest the claims and yet they chose to absent themselves from the trial altogether.

[19] Crucially, the 2 defendant’s position as regards the claims was expressed in his defence that was filed and served before he passed away. The 2 defendant clearly denied the plaintiff’s claims (notwithstanding the bare denial) regarding the 1982 trusts, and put the plaintiff to strict proof regarding his claims as regards the 1984 trusts. It was further stated that the 2 defendant was unable to look for or locate all the relevant documents to respond to the plaintiff’s claims regarding the 1982 trusts. In view of the 2 defendant’s position before he passed away, there was more than sufficient reason for the 5 to 9 defendants to verify and contest the claims made by the plaintiff, and more significantly, there was more than sufficient time for them to do so.

[20] The 5 to 9 defendants claim that they were deeply grieved by the 2 defendant’s death and were not in the proper frame of mind to deal with the proceedings at that time. I do not find this to be a persuasive reason. After the 2 defendant passed away, the 5 to 9 defendants had the proper frame of mind to handle matters relating to the companies which the 2 defendant used to run. Furthermore, the trial was more than a year after the 2 defendant’s death. I have also taken into consideration the material admission that the 5 to 9 defendants could have instructed lawyers to advise them on the suit.

[21] The Court of Appeal in Su Sh-Hsyu held that the applicant’s delay in applying to set aside the judgment is a relevant factor to be taken into consideration. In Vallipuram Gireesa Venkit Eswaran v Scanply International Wood Product (S) Pte Ltd (Kim Yew Trading Co, third party) [1995] 2 SLR(R) 507 (“Vallipuram”), the application to set aside the judgment was made two years after the conclusion of the trial on the ground that it was a procedurally irregular judgment (there was no allegation of fraud). In dismissing the application, the Court took into consideration the fact that no explanation was provided for the delay. The same approach was adopted in Perwira Habib Bank Malaysia Bhd v Wastecol Manufacturing Sdn Bhd & Ors [1988] 3 MLJ 215 (“Wastecoal Manufacturing”), where the application to aside a default judgment was made nine months late. The application was based on the purported merits of the defence. Notably, no allegation of fraud was raised. The Court held that the applicant’s failure to explain the inordinate delay of nine months raised much doubts as to the bona fides of his application, and thereafter dismissed the application.

[22] In the present case, the 5 to 9 defendants were served with the Judgment on 4 December 2009, the very same day when the Judgment was delivered. In the hearing before me, Ms Barker explained that an appeal was filed on the instructions of the 5 to 9 defendants. The 5 to 9 defendants alleged that the appeal was allowed to lapse due to inadvertence of their former solicitors. However, no detail was provided to explain the nature of the inadvertence in filing the appeal documents. In this regard, it is helpful to refer to the observations of the Court of Appeal in Lee Hsien Loong v Singapore Democratic Party and others and another suit [2008] 1 SLR(R) 757 at [22] (in the context of granting leave to file a notice of appeal out of time) that mere inadvertence, in and of itself, is insufficient to constitute a good reason to explain the delay:

[23] In any event, the 5 to 9 defendants could have applied for leave to file and serve the appeal documents out of time given that the Notice of Appeal was filed within time. No reason was provided to explain the 5 to 9 defendants’ omission to make such an application.

[24] Furthermore, I did not see how the explanation for the lapse in filing the appeal documents could be a valid excuse for the delay in bringing the application to set aside the Judgment. It is to be noted that the appeal lapsed on 19 April 2010 but the application by the 5 to 9 defendants to set aside the Judgment was only filed on 9 September 2010. Indeed, according to the 5 to 9 defendants, they claimed to have “inklings of doubt” as regards the authenticity of the evidence as early as December 2009. They tried to explain the delay by claiming that they encountered difficulties in procuring some documents:

[25] This, in my view, was not a convincing reason. It was all along open to the 5 to 9 defendants to apply to court for assistance in procuring the relevant documents. Indeed, O 24 r 6 of the Rules of Court allows for the application for discovery of documents before the commencement of proceedings.

[26] Although I have found the purported reasons for the 5 to 9 defendants’ absence from trial and the late application to be wholly unconvincing, and some even to be disingenuous, it would still be necessary to examine the allegations of fraud raised by the 5 to 9 defendants. The statement of law propounded in Su Sh-Hsyu that the predominant consideration in deciding whether to set aside a judgment under O 35 r 2 is the reason for the defendant’s absence was intended to be of general application. The situation is quite different when the application is founded on actual fraud. In this regard, the authorities are clear that a judgment obtained by fraud cannot be allowed to stand, as Denning LJ observed in Lazarus Estates Ltd v Beasley [1956] 1 QB 702 at 712:

[27] Indeed, the Court of Appeal in Su Sh-Hsyu at [65] endorsed Denning LJ’s observations and set aside the judgment even though the reasons furnished by the applicant to explain her absence were found to be unconvincing. Here, Mr Hri Kumar, counsel for the plaintiff, sensibly accepted that if there is clear and egregious fraud, delay would not be an obstacle. As such, there was a need to examine the specific allegations of fraud made by the 5 to 9 defendants in relation to the 1 defendant’s evidence in respect of each of the trust assets.

[28] As a matter of principle, it is uncontroversial that the unavailability of any key witness to a re-trial is typically a bar to setting aside a judgment whether regularly obtained or obtained in default. This principle is illustrated by the decision of the Manitoba Court of Queen’s Bench in Bank Canadian National v Krause and Krause (1979) 2 Man R (2d) 221 (“Bank Canadian”) at [14] – [16]:

[29] The case of Bank Canadian concerned a default judgment and it applied with greater force in the present case which concerned a regular judgment obtained following a trial. From the decision, it was clear that real and substantial risk of irreparable prejudice to the plaintiff would generally be sufficient to preclude the setting aside of the judgment.

[30] In the Judgment, the 2 defendant was found to have held the following assets on trust for KK Ching:

[31] Before examining the allegation of fraud in respect of each of the assets listed above, it is useful to set out some relevant information to place the entire case in its proper context. First, at all material times, the plaintiff had openly asserted that the 2 defendant held the above trust assets for KK Ching. This was clearly stated in the letter of demand dated 28 April 2008, the Statement of Claim and his AEIC at the trial. I observe here that the plaintiff’s evidence was corroborated by the 1 defendant’s evidence both in her AEIC and her oral testimony at the trial, as well as the 3 defendant’s testimony. I was, therefore, not concerned with a situation where findings were made from evidence which had only emerged in the course of the trial. These assertions were clearly stated from the outset even prior to the institution of the legal proceedings.

[32] Subsequent to the pronouncement of the Judgment, the plaintiff passed away through illness on 4 March 2010. It is obvious that any retrial, if ordered, could no longer involve the participation of the plaintiff. The 5 to 9 defendants recognised that the demise of the plaintiff was a serious impediment to the application. To avoid any issue of irreparable prejudice, the 5 to 9 defendants submitted that it was the 1 defendant who had liedin her AEIC and at the trial in relationto the trust assets purportedly held by the 2 defendant. It should be emphasised that the 5 to 9 defendants made no allegation of fraud against the plaintiff. Instead, they submit that the plaintiff’s evidence was entirely based on what the 1 defendant had told him about the trust assets held by the 2 defendant, and since the evidence of the 1 defendant was allegedly tainted by fraud, no weight should be attached to the plaintiff’s evidence either.

[33] However, the plaintiff’s evidence was not limited only to the information provided to him by the 1 defendant. The plaintiff testified that he spoke to the 2 defendant who admitted to the existence of the 1982 and 1984 Trusts and that the trust assets belonged to the plaintiff. This was very clearly stated in [54] – [55] of his AEIC dated 5 October 2009 which have been reproduced below for completeness:

[34] The 5 to 9 defendants, however, alleged that the plaintiff’s discussion with the 2 defendant was in general terms and that no specific asset was discussed. This was incorrect. In the plaintiff’s AEIC at [20(b)], he identified all the assets which were held on trust by the 2 defendant. In any event, even if the discussion was in general terms without reference to any specific asset, the 5 to 9 defendants were not able to identify what other trust assets the discussion related to. This aspect of the plaintiff’s evidence was not challenged at the trial and was also not challenged by the 5 to 9 defendants in the present application. Based on the plaintiff’s evidence, the 2 defendant had admitted to the existence of the trust assets and that the trust assets ought to be returned to the plaintiff, although he told the plaintiff that he was not ready to transfer the assets at that time. In my view, the plaintiff’s unchallenged evidence as regards the 2 defendant’s admission to the trust assets was fatal to the 5 to 9 defendants’ application. This was so even if I were to disregard the 1 defendant’s evidence in its entirety. It was clear that the Judgment was in part based on the unchallenged evidence of the plaintiff that the 2 defendant had acknowledged his obligation under the 1982 and 1984 Trusts:

[35] Finally, from the evidence, there could be no doubt that the 2 defendant did hold various assets on trust for KK Ching. The 3 defendant in cross-examination testified that at the request of the plaintiff, he met the 2 defendant and requested him to transfer the trust assets back to the plaintiff and that the 2 defendant did not deny that he held assets on trust for KK Ching. The material portion of his evidence at the trial is reproduced in verbatim below:

[36] There was no suggestion by the 5 to 9 defendants that the evidence of the 3 defendant was not truthful. Further the 3 defendant also testified that KK Ching had approached him to hold assets on trust but he refused:

[37] Thus the clear picture which emerged from the evidence was that KK Ching wanted his relatives to hold assets on trust for him. This was the evidence of the 1, 3 and 4 defendants. During the hearing before me, I quizzed Ms Barker that if the 2 defendant did not hold the above assets on trust for KK Ching, then what other assets did the 2 defendant hold on trust for him? She was unable to provide any satisfactory explanation other than to say that the burden was on the plaintiff to prove his case. However, it cannot be gainsaid that the plaintiff had already proved his claims and had obtained judgment to that effect. The burden was therefore on the 5 to 9 defendants to prove otherwise. The 5 to 9 defendants were plainly unable to discharge this burden given their case that no fraud was alleged against the plaintiff.

[38] It ought to be emphasised here, that the application before me was premised solely on allegations of fraud. The 5 to 9 defendants did not submit that the Judgment can or should be set aside on any basis other than fraud. During the hearing, the parties were ad idem on the following principles:

(a) The burden was on the applicant to prove that the Judgment was procured by actual fraud.

(b) The fraud must strike at the root of the litigation. In other words, the fraudulent evidence must be pivotal to the findings made by the trial judge.

[39] Where the parties departed, as is often the case, was the proper interpretation of the fraud exception. What is the level of proof required to establish fraud in order to set aside an otherwise regular judgment? From my review of the authorities, it was clear that errors short of fraud are insufficient to set aside a regular judgment.

[40] The requirements of establishing fraud in order to set aside a judgment were succinctly summarised by the Supreme Court (Court of Appeal) of New South Wales, Australia, in Wentworth v Rogers (No. 5) (1986) 6 NSWLR 534 (per Kirby J):

[41] The Court of Appeal in Su Sh-Hsyu made pertinent observations to elaborate on the second requirement as stated by Kirby J (the second requirement as stated above by Kirby J coincided with the first and second requirements of Ladd v Marshall [1954] 1 WLR 1489 (“Ladd v Marshall”)). Although the court would, in the interests of finality of judgments, generally expect the applicant alleging fraud to adduce new evidence which could not have been discovered at the time of trial with due diligence, this requirement ought not to be imposed rigidly such as to cause injustice in a situation where the fresh evidence uncovers fraud on the other party. Nonetheless, the Court of Appeal emphasised that the fraud must strike at the very root of the litigation (per V K Rajah JA at [36]):

[42] The requirement that the fraud must strike at the very root of the litigation is reinforced by the House of Lords’ holding in Boswell v Coaks (No 2) (1894) 86 LT 365n at p 366 that there must be a “new discovery of something material...that...would be a reason for setting the judgment aside if it were established by proof”. Even before this requirement is considered, however, the applicant has to first discharge its burden of proving actual fraud. If this burden is not discharged, it would be superfluous to consider whether the alleged fraud (that was not established) struck at the root of the litigation. As emphasised by the English Court of Appeal in Patch v Ward (1867 – 68) LR 3 Ch App 203 at p 212 (per Sir John Rolt LJ) (“Patch v Ward”), this is not a burden to be taken lightly:

[43] As will be illustrated by the case authorities discussed below, dishonesty is the cornerstone of actual fraud (see also United Overseas Bank Ltd v Bebe bte Mohammad [2006] 4 SLR(R) 884 at [34]).

[44] The evidence presented by the party alleging fraud may, upon a proper analysis, reveal a case of erroneous or misleading evidence short of fraud. This would be so when the evidence was led erroneously without any dishonest intention to mislead the court. The Malaysian High Court in Seng Huat Hang Sdn Bhd & Ors v Chee Seng & Co Sdn Bhd [1987] 1 MLJ 413 (“Seng Huat Hang”) held that the purported evidence of fraud in that case was at most “misleading or even erroneous” but it fell short of actual fraud. Chee Seng & Co Sdn Bhd (“Chee Seng”) had instituted proceedings against Seng Huat Hang Sdn Bhd (“Seng Huat”) for possession of a number of bays comprised in various godowns. Chee Seng stated in its Statement of Claim that it was the owner and landlord of the godowns concerned, and that it was therefore entitled to possession. Seng Huat admitted in its Defence that they were the tenants of the godowns liable to pay monthly rent to Chee Seng, so long as Chee Seng was able to acquire a Temporary Occupation Licence (“TOL”) from the Government of Penang. Subsequent to the filing and service of the claim, Chee Seng’s solicitors sent some correspondence to Seng Huat’s solicitors which were apparently left unread. The correspondence actually showed that Chee Seng did not have the requisite TOL. Subsequently Chee Seng applied for a consent order in the Magistrate’s Court whereby Seng Huat was required to account for monthly rent. Seng Huat’s solicitors consented on its behalf. Chee Seng’s supporting affidavit averred that Seng Huat had admitted in its Defence that they were liable to pay a monthly rent to Chee Seng. It appears that no mention was made as regards the lack of the requisite TOL. On the date of hearing, neither Seng Huat nor its solicitors were present and default judgment for possession was duly entered in favour of Chee Seng.

[45] Thereafter, Seng Huat discovered that Chee Seng did not possess the requisite TOL. It applied for a declaration that the possession orders made by the Magistrate’s Court had been fraudulently obtained by wilful concealment from the court of the material fact that the State Authority did not issue the TOL to Chee Seng, and that the orders were therefore null and void. The Malaysian High Court found that the correspondence (which showed that Chee Seng did not have the requisite TOL) sent by Chee Seng’s solicitors well before the Magistrate Court action showed that there was no deliberate fraud on Chee Seng’s part. In that context, Chee Seng’s failure to disclose its lack of title was at most misleading or erroneous. In particular, Edgar Joseph Jr J held:

[46] The observations above are consistent with the general principle stated by the Malaysian Court of Appeal in Chee Pok Choy & Ors v Scotch Leasing Sdn Bhd [2001] 4 MLJ 346 (“Chee Pok Choy”) that:

[47] The Malaysian Court of Appeal also endorsed the observations in Satish Chandra v Satish Kantha Roy [1923] AIR 73 at p 76 that mere suspicion or conjecture is insufficient to establish fraud to set aside a judgment:

[48] In Chee Pok Choy, the appellant-applicant’s evidence of fraud was not challenged by the respondent. The court held that the trial judge had wrongly decided that there was no fraud given that he did not investigate or scrutinise the allegations of fraud, as he ought to have.

[49] It was emphasised in Price v Stone [1964] VR 106 (“Price”) that there must be something more than false evidence in order to establish actual fraud. The Supreme Court of Victoria, Australia, held that a witness’s accidental or inadvertent swearing of false evidence does not amount to deliberate fraud. In Price, Mrs Stone had been a lodger at Mrs Price’s house, and had placed several belongings in the latter’s home. After Mrs Stone moved out, she claimed that she had left some furniture at Mrs Price’s place. At trial during cross-examination, Mrs Stone stated that she did not sign a document which purported to be a list of furniture which Mrs Price alleged was provided by Mrs Stone as a receipt of the goods taken. Mrs Stone also testified during cross-examination that she was not present when the movers came to load the furniture, contrary to Mrs Price’s allegation. Judgment was granted in favour of Mrs Stone.

[50] Subsequently, Mrs Price applied to set aside the judgment on the ground that Mrs Stone had committed perjury, as it appeared that the furniture movers could give evidence to prove that Mrs Stone was present when they loaded the furniture. The Supreme Court held that the inadvertent giving of false evidence at most goes to affect the credibility of the witness; it does not equate to deliberate fraud. To prove the latter, it must be shown that the witness had a predetermined intention to mislead the court, which was not found to be the case. Gillard J held (at 109 – 110):

[51] From the above, it is clear that falsity due to inadvertence, without more, does not amount to fraud.

[52] It would seem that the Privy Council’s decision of Hip Foong Hong v H Neotia and Company [1918] AC 888 (“Hip Foong Hong”) suggests the principle that a party’s failure to adduce evidence to corroborate the opponent’s case does not amount to fraudulent conduct that taints a judgment. In Hip Foong Hong, the respondents had a dispute over a sale of goods transaction with the appellants. The appellants sued the respondents for non-delivery of goods, while the respondents alleged that the relevant contract had already been terminated. After the appellants’ claim was dismissed, the appellants filed a motion for a new trial of its action on the ground that the judgment had been obtained by fraud. The appellants asserted that the respondents had failed to adduce certain documentary evidence in their possession which showed that there was an existing contract between the parties at the material time.

[53] The corroborative nature of the undisclosed evidence is evident from Lord Buckmaster’s explanation at p 892 that the undisclosed evidence added nothing beyond a mere repetition of evidence that was already adduced by the appellants, and that the evidence did not disclose any new fact:

[54] In the final analysis, the Privy Council was of the view that the respondents’ failure to adduce the evidence did not amount to fraud. This was so even though the evidence was found to be material.

[55] Further, it is pertinent that the erroneous insistence on rights based on an opinion or an inference that was fairly and reasonably reached does not amount to fraud either. This remained so even if it was subsequently found, with hindsight, that the inference or opinion was overstated or overestimated. This principle can be gleaned from the case of Patch v Ward which concerned two mortgages over a property. Ward was the solicitor for the second mortgagee. In May 1847, a bill was filed by the first mortgagee for foreclosure. In October 1847, the mortgagor signed an authority for the tenants to pay to Ward their rents due. Ward would at times receive the rent in his own name, and at times receive rent in the second mortgagee’s name. Subsequently, Ward became the equitable owner of the first and second mortgage by making payment to the first and second mortgagees. Although the payment to the first mortgagee was funded by Ward, it was made in the second mortgagee’s name such that it seemed that it was the second mortgagee who had redeemed the first mortgage. Before an order absolute for foreclosure was made, a supporting affidavit was filed in the second mortgagee’s name which stated that the mortgagor has failed to make payment of the whole outstanding sum of £6870 to the second mortgagee. An order absolute for foreclosure was made on the strength of this affidavit. The mortgagor was absent during the proceedings leading up to the order absolute as he was overseas.

[56] Subsequently, the mortgagor sought to set aside the order for foreclosure as having been obtained by fraud. According to the mortgagor, he had indeed paid the sum of £161 as rent to Ward, and that this rent was received by the second mortgagee. As such, the assertion in the second mortgagee’s affidavit that the whole sum of £6870 was unpaid was false and untrue.

[57] According to Ward’s case, he had become the equitable owner of the first two mortgages when he made payment towards them. In addition, he had a third equitable charge over the same property under a memorandum signed in October 1847 where the mortgagor agreed that Ward would receive payment of rent. Ward had admitted to the receipt of £161 as rent, but he applied them not towards the first or second mortgage, but towards the third equitable charge which he obtained from the mortgagor.

[58] The Court of Appeal held that Ward had acted on his own opinion, and that it was one which was fair and reasonable. Although Ward might have insisted on rights which were subsequently found to be overstated, it did not constitute fraud. Lord Cairns LJ held at pp 207 and 210:

[59] In examining whether fraud was established, I adopted the principle of law from my review of the cases that dishonesty is the cornerstone for fraud. Indeed, the case authorities have shown that inadvertent errors in the evidence, the drawing of wrong inferences, conjectures, lack of corroborative evidence or even false evidence (ie incorrect evidence) short of actual and deliberate fraud would not be sufficient to discharge the burden of proof. To hold otherwise would mean that the 5 to 9 defendants would effectively be permitted to proceed with the application as if it was an appeal. In the cases where fraud was found to justify the setting aside of the judgment, they typically involved objective evidence to establish actual fraud as in Su Sh Hsyu where the fresh evidence in the form of a scientific report from the Health Sciences Authority (“HSA”) on its face suggested that the deposit slip evidencing payment of the shares contained the genuine signature of the respondent. The respondent who had alleged that he did not receive any payment, however, did not adduce any evidence to contradict the findings by the HSA. If the HSA report were established to be accurate, it would follow that the respondent had perjured on the question of payment which went to the root of the case. Furthermore, the high threshold in establishing fraud can also be seen in the decision of Chee Pok Choy, where the respondent was found to have actively concealed the fact that it was a licensed moneylender. If the respondent’s status had not been concealed, it was required under several statutory provisions to provide specific information and particulars of the loan. The non-compliance of such provisions rendered the respondent’s originating summons a nullity. The Court also found that the respondent had deliberately misled the court into making the relevant order for sale. In such circumstances, actual fraud was established and the order for foreclosure was consequently set aside. Likewise, the exceptional circumstances of finding actual fraud can be seen in SP Chengalvaraya Naidu v Jagannath AIR 1994 SC 853 (“SP Chengalvaraya”) where Jagannath had purchased a property on behalf of Chunilal at a court auction. The latter had obtained a decree against the appellants (judgment debtor), and the court sale was made in execution of the said decree. The appellants paid the full decretal amount to Chunilal. By a registered deed, Jagannath relinquished all his rights in the property to Chunilal. However, without disclosing that he had executed the release deed, Jagannath filed a suit for partition of the property and obtained a preliminary decree. The appellants were not aware that Jagannath had no locus standi to file the suit as he had already executed a registered release deed and relinquished his rights in the property to Chunilal. In this regard, the very basis for which the preliminary decree was procured was found to be missing. The Supreme Court of India found that there was “no manner of doubt” that the situation was one of fraud which was opined as “an act of deliberate deception with the design of securing something by taking unfair advantage of another”, and “a deception in order to gain by another’s loss[;] ... a cheating intended to get an advantage”. See SP Chengalvaraya at [6]. The Supreme Court upheld the trial court’s decision that the decree was obtained by fraud and was consequently a nullity.

[60] In my view, there is a clear and rational reason for imposing such a high standard of proof on an applicant such as the 5 to 9 defendants to establish actual and deliberate fraud. In the usual course of events, if a party is dissatisfied with a decision, typically an appeal is filed to prove that it was wrongly decided. If fresh evidence is to be adduced in support of the appeal, such an applicant is required to satisfy the stringent test laid down in Ladd v Marshall. There can be no doubt that the 5 to 9 defendants would not have satisfied the first requirement laid down in Ladd v Marshall given that the fresh evidence which they had sought to adduce to prove the alleged fraud comprise essentially the share registers of the companies which would have been available at the trial with the exercise of a modicum of due diligence. It is also uncontroversial that although the civil standard of proving on a balance of probabilities applies, the Court has a higher expectation of proof when it comes to allegations as serious as that of fraud, as was decided by the Court of Appeal in Tang Yoke Kheng (trading as Niklex Supply Co) v Lek Benedict and others [2005] 3 SLR(R) 263.

[61] As I have observed above, the fact that the 5 to 9 defendants did not challenge the plaintiff’s evidence was fatal to the application. That alone was sufficient to dispose of the application. Nonetheless, I reviewed the evidence in relation to each of the above trust assets and arrived at the determination that the 5 to 9 defendants had failed to discharge their burden to prove actual and deliberate fraud in respect of any of the trust assets which the 2 defendant was found to have held on trust for KK Ching. The challenge mounted by the 5 to 9 defendants extended to each of the assets which were found to be held on trust by the 2 defendant for KK Ching. They alleged that each of the findings was tainted by fraud. They sought to rely on the following “fresh evidence” to show that the Judgment was procured by the “perjured evidence” of the 1 defendant:

[62] It would be a misnomer to describe any of the above evidence as “fresh evidence”. All of them were either in the possession, custody and control of the 2 defendant at all material times (and consequently the 5 to 9 defendants) or could have been made available without any difficulty. Further in the course of the hearing, Ms Barker submitted that the 5 to 9 defendants’ case in relation to Seng Heng Realty was clear and strong though she accepted that their case in relation to KK Holdings and National Aerated was not as strong.

[63] There were altogether four shares issued in KK Holdings. The 5 to 9 defendants submitted that the one share in KK Holdings was not transferred from KK Ching to the 2 defendant in 1982 as alleged by the 1 defendant. Instead, from the share register of KK Holdings adduced by the 5 to 9 defendants, one share was allotted to the 2 defendant in 1982. It is pertinent to note that at the same time one share was also allotted to the 1 defendant. Nonetheless, the 1 defendant testified erroneously in [23] of her own AEIC that KK Ching had transferred his shares to various parties which included the one share that was actually allotted to her under the 1982 Trust. Therefore, taking the 5 to 9 defendants’ case at its highest, at best the 1 defendant had merely made an error in using the word “transfer” instead of “allot” in her evidence. Significantly, she made the same error in respect of the one share which she acknowledged was held on trust for KK Ching. In my view, the burden of proving fraud cannot be discharged by pointing out the 1 defendant’s inadvertent use of imprecise language.

[64] The 5 to 9 defendants further alleged that apart from the allotted share, the other share held by the 1 defendant in KK Holdings was transferred to her by Ching Kwong Hoong and not by KK Ching, and that this would suggest that the 1 defendant could not have held that share on trust for KK Ching. If this were right, that would logically mean that the 1 defendant also held one share in KK Holdings on trust for Ching Kwong Hoong. However, to-date Ching Kwong Hoong (who is still alive) has notably not come forward to claim the one share in KK Holdings. Further, the 4 defendant had also admitted that she held the balance one share in KK Holdings on trust for KK Ching. In fact this merely went to prove that all the four shares in KK Holdings were at all material times held on trust for KK Ching. It was probably no coincidence that KK Holdings bore the initials of KK Ching.

[65] I therefore held that there was no fraud whatsoever in the evidence of the 1 defendant in relation to the one share in KK Holdings that I found was held by the 2 defendant on trust for KK Ching.

[66] The 5 to 9 defendants’ case was that the 1 defendant’s evidence in relation to National Aerated was fraudulent because the shares were not transferred to the 2 defendant in 1982. Instead, from the share register of National Aerated, they were only transferred from KK Ching to the 2 defendant in 1985. To understand this error, it was necessary to note that it was never disputed that KK Ching was the registered owner of 62,250 shares as at 3 October 1981. At that time, the shareholding of National Aerated was as follows:

[67] It was also not disputed that a rights issue (1 for 1 share) was made on 8 January 1982. KK Ching, like the other shareholders (except the Yap family who did not subscribe), was allotted one share in National Aerated for every one share owned. Consequently, KK Ching was issued with a further 62,250 shares. A further 38,350 shares were allotted to KK Ching from an excess rights issue in February 1982. On 15 October 1982, KK Ching transferred 62,250 shares to the 1 defendant to hold on trust for him. On 8 July 1985, KK Ching transferred his balance 101,100 shares (a sum of 62,250 and 38850 shares) in National Aerated to the 2 defendant. Arising from the above, it could at best be said that the 1 defendant made an error in stating that the transfer of KK Ching’s shares in National Aerated to the 2 defendant occurred in 1982 instead of 1985.

[68] In 1989, the Yap family shares in National Aerated were acquired by the Ching family and the 2 defendant distributed the Yap family shares to the members of the Ching family in proportion to their respective shareholdings in the company. Following the acquisition, the 2 defendant distributed 10,020 National Aerated shares to the 1 defendant in respect of the 62,250 shares which she was holding on trust for KK Ching. A total of 16,274 shares were proportionately distributed to the 101,100 shares held on trust by the 2 defendant for KK Ching, thus making the total number of shares held on trust to be 117,374 shares (a sum of 16,274 and 101,100 shares).

[69] Before me, the 5 to 9 defendants also sought to prove that the shares owned by KK Ching in National Aerated were actually paid by the 2 defendant and hence the shares could not have been held on trust for KK Ching. This was based on a journal maintained by the bookkeeper of the 2 defendant. It was unclear how this journal was relevant to the allegation of fraud, given that the 5 to 9 defendants have not disputed the fact that at the time when the plaintiff and 1 defendant gave evidence at the trial, they had no access to the financial journal. More pertinently, I found that the entries in the journal were inconclusive and at best equivocal. They certainly did not prove that the National Aerated shares registered in KK Ching’s name were paid by the 2 defendant. In particular, the journal entry dated 12 January 1982 merely stated “NAWC [Rights Issue]”, while the entry dated 11 February 1982 stated “NAWC (KK Ching Excess Shares)”. These entries do not conclusively show that the 2 defendant had paid for the 62,250 shares and could equally be consistent with the 2 defendant making payment on behalf of KK Ching. In any event, the entry for “NAWC [Rights Issue]” reflected a payment of $152,250, and not $62,250. Furthermore, with regard to the entry which stated “NAWC (KK Ching Excess Shares)”, the very same language was used in respect of the payment for the shares in the 6 defendant’s name, as the journal entry also dated 11 February 1982 stated “NAWC ([Zhaoliang] Excess Shares)”; yet it was not asserted that the 6 defendant was holding these shares on behalf of the 2 defendant. Lastly, in view that both the 2 defendant and the bookkeeper have since passed away, the Court would not be assisted on whether the journal was genuine, accurate or complete, and even on the proper interpretation of the entries therein. As such, there remained unresolved doubts on the reliability and accuracy of the journal. For example, although the journal entry dated 20 April 1982 stated “NAWC [Change to Cash]”, there was no corresponding record of the 2 defendant liquidating his National Aerated shares during this period. This demonstrated the questionable accuracy and completeness of the journal entries.

[70] If KK Ching had indeed held his shares in National Aerated on trust for the 2 defendant, KK Ching would be the only brother in the Ching family who had no beneficial interest in the shares of National Aerated. The 5 to 9 defendants were not able to provide any conceivable explanation to account for this improbable discrepancy in the familial distribution of shares. In any event, even if the shares had been paid by the 2 defendant, this would at most go to the merits of the 5 to 9 defendants’ case which properly belonged as an issue for the trial or an appeal subject to compliance with the test in Ladd v Marshall. Further, Mr Hri Kumar drew my attention to the 6 defendant’s 2 affidavit wherein he alleged that the 2 defendant had complained that the other members of the Ching family had not repaid him for the monies spent for the Yap family shares. By their own case, the 2 defendant treated the payment as a loan to his family members which would displace the contention that KK Ching had held the National Aerated shares on trust for him. In my view, these allegations do not even come close to establishing fraud in the evidence of the 1 defendant in relation to the National Aerated shares.

$1 million cash

[71] Put simply, the 5 to 9 defendants’ case was that no documentary evidence was adduced by the plaintiff to prove the existence of the trust in respect of the $1 million cash. The finding was based on the evidence of the 1 defendant. Since the evidence of the 1 defendant in relation to KK Holdings and National Aerated was purportedly unreliable, her evidence in relation to the $1 million should likewise be tainted.

[72] In the present case, the 5 to 9 defendants contended that no documentary evidence was adduced by the plaintiff to prove the existence of the trust in respect of the $1 million cash. However, the production of any such documentary evidence would not have disclosed any new fact. The only function of any such documentary evidence would have been to corroborate the plaintiff’s position. It could hardly be said that the non-disclosure of evidence which would not have disclosed any new fact could constitute actual fraud. Furthermore, to the extent that the Privy Council in Hip Foong Hong had opined that a party’s failure to disclose corroborative evidence to support the opponent’s case does not amount to fraud, it is all the more so in the case of non-production of evidence to corroborate one’s own case. This claim was asserted by the plaintiff from the very outset in the letter of demand. The absence of corroborative evidence was apparent to the 5 to 9 defendants from the outset. This point could have been raised at the trial and the relevant witnesses (ie the plaintiff and the 1 defendant) cross-examined on it. The failure to produce corroborative evidence was not tantamount to actual fraud.

[73] In further support, the 5 to 9 defendants produced the 2 defendant’s UOB bank statements to show that there was no deposit of $1 million in 1982. This was an argument on the merits which should and could have been raised at the trial. In any event, the 5 to 9 defendants’ argument did not inexorably lead to the conclusion that the evidence of the 1 defendant in relation to the $1 million trust was necessarily fraudulent. During the hearing, Ms Barker accepted that the 2 defendant might well have other bank accounts which have not been disclosed.

[74] I come to the 5 to 9 defendants’ case in respect of the Seng Heng Realty shares which Ms Barker described as their strongest case. They submitted that the plaintiff’s evidence that KK Ching had transferred 32,000 shares in Seng Heng Realty to the 2 defendant under the 1982 trusts was fraudulent. They pointed out that since the company records showed that KK Ching did not at any time prior to his death own any shares in Seng Heng Realty, it was not possible for KK Ching to have transferred any shares in Seng Heng Realty to the 2 defendant.

[75] The allotment of shares in Seng Heng Realty was a general familial arrangement to distribute to each brother an approximately equal share in the company. The shares were distributed in 1975 and the Ching brothers held 32,000 shares each but the 2 defendant held twice the amount of shares which totalled 64,001 shares. The 5 to 9 defendants offered no explanation as to why KK Ching would be excluded from this familial arrangement, and why the 2 defendant would hold twice the amount of shares held by the other brothers individually. The fact that the 2 defendant was the original shareholder in Seng Heng Realty did not explain the difference as Ching Kwong Lum, who was the 1 defendant’s father and one of the original shareholders together with the 2 defendant, was distributed the same number of shares (32,000 shares) as the other Ching brothers.

[76] The 5 to 9 defendants submitted that the evidence of the 1 defendant in [21] of her AEIC, where she explained that she became aware of the transfer of shares (which included the Seng Heng Realty shares) in the course of updating the register of shareholders for these companies, was false because the shares in Seng Heng Realty were never registered in KK Ching’s name in the first place and hence no question of transfer arose. It was therefore suggested that if she had indeed updated the register of Seng Heng Realty, she would have realised that KK Ching had not at any time held shares in Seng Heng Realty. This allegation, however, presupposed that that was the only reason the 1 defendant came to know of the trust assets including the Seng Heng Realty shares held by the 2 defendant. She had indeed come to know of the trust assets from several other sources, none of which were challenged. The 1 defendant’s unchallenged evidence was that:

In addition, the 1 defendant also gave undisputed evidence that:

[77] The 2 defendant received the sum of $2,113,398.18 on trust (referred to as “Seng Heng monies”) after Seng Heng Realty went into voluntary liquidation. The 5 to 9 defendants relied on an affidavit filed by Ms Chua Hwee Kiang as liquidator in the voluntary liquidation of Seng Heng Realty which was filed in response to a discovery order obtained by the plaintiff before the trial. The 5 to 9 defendants purported to rely on Ms Chua’s affidavit to support their contention that the 2 defendant did not receive any part of the Seng Heng monies. If it was not received by the 2 defendant, then who received it? Ms Chua’s statements in her affidavit provided no assistance to the 5 to 9 defendants. The affidavit only stated that Ms Chua did not have in her possession, custody or power the documents evidencing the respective amount of funds returned to each of the shareholders of Seng Heng Realty. Ms Chua stopped short of saying that she has never seen them or that payments to the shareholders of Seng Heng Realty never took place. I emphasise that the burden was on the 5 to 9 defendants to prove that the 2 defendant did not receive the Seng Heng monies, and that any evidence which asserted otherwise must necessarily be fraudulent or tainted with fraud. They did not discharge this burden by simply raising the unlikely possibility that the Seng Heng monies may not have been received by the 2 defendant. If so, the monies must be still in Seng Heng Realty but no evidence to that effect was adduced by the 5 to 9 defendants.

[79] Furthermore, in the stay application filed by the 5 to 9 defendants on 26 February 2010, it was stated in the supporting affidavit that they have procured documentary evidence from the National Aerated Share Register and the 1982 financial journal, to show that the transfer of shares had allegedly taken place in 1985 instead of 1982, and that the shares issued to KK Ching were paid for by the 2 defendant. Although the same arguments based on the same documents (with regard to disputes over the shares in National Aerated) were made as in the present application before me, the 5 to 9 defendants conspicuously did not make any allegation of fraud for the stay application. Instead, in the same supporting affidavit, they merely stated that they “verily believe that there are merits to [their] appeal”. In these circumstances, it was manifestly evident that even the 5 to 9 defendants were themselves not convinced that there was fraud involved notwithstanding their access to the purported “new evidence” in the form of National Aerated’s Share Register and the 1982 financial journal. The application to set aside the Judgment on grounds of fraud was clearly an afterthought contrived as an attempt to revive the case after having allowed their appeal to lapse. At the highest, by their own case, the “new” evidence would merely establish that there might be some “merits” in their appeal.

[80] One of the reasons proffered by the 5 to 9 defendants to explain their absence from the trial was their lack of personal knowledge of the alleged trusts and their belief that they “would be unable to make any meaningful contribution to the proceedings”. However, everything that they have now alleged in their attempt to set aside the Judgment were matters which they could have raised at the trial and, more importantly, when the plaintiff was still alive. In the context of the required threshold to set aside the Judgment, the 5 to 9 defendants were indeed unable to make any meaningful contribution. They made a conscious and deliberate judgment call and “buried their heads in the sand” (see Shocked at p 382) when they had the opportunity to properly contest the claims. Under such circumstances, the observations of Browne-Wilkinson VC in Craddock v Barber [1986] CA (19 February 1986) that: “I [can] see no manifest injustice in not offering him a second opportunity”, are particularly apposite. To do the contrary would result in manifest injustice to the plaintiff and now his estate.