Chip Hup Hup Kee Construction Pte Ltd v Lim Lian Choon

Kan Ting Chiu J:

[1] The plaintiff Chip Hup Hup Kee Construction Pte Ltd is a company in the building and construction business. The defendant Lim Lian Choon (“LLC”) was an employee of the plaintiff. He was employed as a site foreman of the plaintiff in 1994 and was promoted to Plant and Machinery Manager in 1998, until his employment was terminated on 30 November 2006.

[2] Following the termination of his employment, the plaintiff filed this action against him, under five heads of claims. The defendant disputed all the five heads of claims and made a counterclaim against the plaintiff arising from his termination. Each of the claims and the counterclaim is examined separately.

[3] The plaintiff pleaded in paras 4, 5 and 8 of its Statement of Claim (Amendment No 2) (“Statement of Claim”) that:

and claimed damages for the conversion of the cheques in the sum of $145,000.

[4] The seven cheques were issued by the plaintiff to pay a sub-contractor, Creative Engineering Pte Ltd (“Creative”) for aluminium sunbreakers that Creative had supplied and installed at a construction project.

[5] The seven cheques were not issued to Creative, but were cash cheques. After they were issued, the cheques were collected by the defendant and were paid into his bank account. The defendant had an explanation for this. He had made loans to Creative when Creative needed funds to construct the sunbreakers, and Creative had agreed to repay the loans from progressive payments they were to receive from the plaintiff.

[6] Creative’s director, Tan Kah Loo was a witness for the defendant, and he confirmed in his Affidavit of Evidence-in-Chief dated 27 February 2008 that:

Creative had also issued an open letter dated 28 April 2008 (Exhibit D3) which stated, inter alia:

[7] Creative and the plaintiff had settled the amounts for the project by a revised statement of accounts dated 23 January 2007. At the close of the case, the plaintiff revised its position on damages, and submitted that:

[8] Although the plaintiff acknowledged that Creative had given it credit for the sum of $145,000, they felt that they still had a case on the seven cheques. They did not accept the evidence of the defendant and Creative on the loan. Neo Kok Eng (“NKE”), the plaintiff’s managing director and principal witness, believed that there had been some improper conduct or conspiracy between Lim Leong Huat (“LLH”), who is the defendant’s brother and was the former executive director of the plaintiff, and the defendant involving the seven cheques. However, the plaintiff had not pleaded that the defendant and LLH were jointly involved in any wrongdoing in relation to the seven cheques.

[9] The plaintiff’s case as pleaded in para 5 of the Statement of Claim was that the defendant “without the knowledge and/or consent of the [Plaintiff], unlawfully deposited the said 7 cheques into his personal bank accounts for his own use and benefit”. The key elements here were the plaintiff’s absence of knowledge and consent, and the unlawful depositing of the cheques.

[10] The plaintiff did not show that there was a necessity for its knowledge and consent for the defendant to deposit the cheques into his bank account. As Creative admits that it had borrowed money from the defendant and repaid him with the seven cheques, prima facie, the defendant did not need to inform the plaintiff or seek its consent to bank in the cheques. It may be different if the defendant was prohibited by the terms of his employment from making the loan to Creative or accepting the seven cheques as repayment, but that was not the plaintiff’s case.

[11] The allegation of unlawful depositing of the cheques was also not made good. The plaintiff intended for the cheques for $145,000.00 to be given to Creative. Creative had credited the plaintiff with the $145,000.00 that was paid and had used the cheques to pay their own debt to the defendant, who deposited the cheques into his bank account. In these circumstances, the depositing of the cheques was not unlawful in any way.

[12] On the alternative ground of conversion, the plaintiff’s intention was for the seven cheques to be delivered to Creative for the latter’s benefit. The evidence was that the defendant had collected the cheques from the plaintiff’s accounts department after they were issued, kept them, and deposited them into his bank account with Creative’s knowledge and consent. As the plaintiff’s case was that the seven cheques were intended for Creative, they must accept that Creative was entitled to authorise the defendant to retain them after he had collected them. The defendant cannot be said to have converted those cheques when he deposited them into his bank account with Creative’s knowledge and consent.

[13] The plaintiff’s case on these seven cheques fails.

[14] The plaintiff pleaded in paras 9 and 10 of the Statement of Claim that:

and sought:

(a) an account of all plant and machinery belonging to the plaintiff entrusted to the defendant which were missing and/or stolen and/or otherwise unaccounted for; and

(b) an order for payment of the amount(s) found to be due from the defendant upon the taking of account.

[15] The basis of this claim was that the defendant was entrusted with the control, care and custody of the plaintiff’s plant and machinery and that he was liable to compensate the plaintiff for the lost plant and machinery.

[16] The defendant’s duties and responsibilities as Site Foreman and Plant and Machinery Manager were not spelt out in writing. The further and better particulars supplied by the plaintiff (dated 10 July 2007) (“the F&BP”) stated at para 6 that the entrustment arose out of an oral agreement between the defendant and LLH, and was implied under the defendant’s employment as Site Foreman (and not Plant Manager).

[17] NKE asserted at para 36 of his Affidavit of Evidence-in-Chief that “the Defendant was entrusted with the control, care and custody of the [Plaintiff’s] plant and machinery situated at the [Plaintiff]s warehouse at 1 Jalan Besut, Singapore 619554” (not all of the plaintiff’s plant and machinery).

[18] In its Reply and Defence to Counterclaim (Amendment No 2), the plaintiff went on to state at para 6 that:

[19] The plaintiff alleged that the Master Lists were to be submitted monthly, with details of the plant and machinery acquired, sold, disposed of, but the defendant only submitted the lists sporadically and did not maintain proper records of the plant and machinery.

[20] The difficulty with the plaintiff’s position was, firstly, that the defendant and LLH denied that there was an oral agreement as alleged, and the plaintiff did not produce any evidence of any such oral agreement. Secondly, no authority was produced to support the plaintiff’s case that employment as site foreman ipso facto attached liability on that employee to compensate his employer for the loss of the employer’s plant and machinery wherever and however the loss occurred.

[21] When the defendant was promoted to the position of the plaintiff’s Plant and Machinery Manager, he would have had some authority and responsibility over the plant and machinery. The defendant acknowledged that he was involved in the disposal of the plant and machinery, but he claimed that he only made decisions regarding such disposal after consulting NKE or LLH and obtaining their approval. LLH confirmed that the defendant would consult him or NKE and get a decision from them before he sold any equipment, and NKE, under cross-examination, agreed that he did not know if the defendant had the power or authority to make decisions on the sale or disposal of plant and machinery without LLH’s prior permission. It was not put to the defendant that it was a term of his employment that he had to make good to the plaintiff any plant and machinery that was lost or unaccounted for.

[22] The plaintiff has not proved the alleged entrustment and the defendant’s liability to account for lost plant and machinery. This claim is not proved.

The defendant’s failure to account to the plaintiff for monies received for the disposal of the plaintiff’s plant and machinery

[23] The plaintiff pleaded in its Statement of Claim that:

and sought:

(a) “an account of all the plant and machinery … disposed of by the Defendant” (which is taken to mean the “proper” price of the plant and machinery sold); and

(b) an order that the defendant pay to them “the amount(s) found to be due from the Defendant upon the taking of account”.

[24] In para 7 of the F&BP, the plaintiff elaborated that:

[25] The plaintiff further submitted that:

(a) The defendant was placed in charge of all these transactions, and he had to account to the plaintiff for the same;

(b) The plaintiff also discovered that the defendant had disposed of some of the plaintiff’s equipment, which had been purchased at the total price of $3,366,532.09, for a total sum of only $446,630, which represents a gross undervalue; and

(c) Even after taking into account the reasonable costs of depreciation in respect of the equipment which had been disposed of by the defendant, this huge discrepancy between the purchase price and the disposal value cannot be accounted for or otherwise explained or justified.

[26] The plaintiff was complaining that the defendant had sold the plant and machinery at an undervalue and he had failed to perform his duties to obtain proper prices for them.

[27] The defendant’s defence was that:

LLH corroborated this and confirmed that the defendant consulted him or NKE on the disposal of equipment and took their instructions on the prices for them. Counsel for the plaintiff put to the defendant as well as LLH that the defendant had never consulted NKE on the sale of plant and machinery, but he did not dispute LLH’s evidence that LLC had consulted him on such matters.

[28] A review of the evidence shows that the defendant was involved in the sale and disposal of the plaintiff’s plant and machinery. The defendant said that he obtained the instructions of the plaintiff’s managing director NKE or executive director LLH when he sold the plant and machinery. The plaintiff denied that NKE had authorised the sales but they did not dispute that LLH had authorised them.

[29] Since it was not the plaintiff’s case that the defendant could not sell the plant and machinery with the authority of LLH, there was nothing further for which he had to account to the plaintiff after the proceeds had been paid to the plaintiff. This claim therefore fails.

[30] The plaintiff pleaded in its Statement of Claim that:

[31] The plaintiff’s case was set out in NKE’s affidavit of evidence-in-chief as follows:

[32] Another witness for the plaintiff, Khoo Choon Yean (“KCY”), the plaintiff’s accounts and administrative executive, deposed in her affidavit of evidence-in-chief that:

[33] KCY’s evidence also disclosed that the alleged sales took place in 2003 and 2004 and that the scrap metal sold was from a project referred to as Sengkang N2 C29 & 30 (“the Sengkang project”).

[34] The defence was stated in the following terms:

[35] The defendant adduced the evidence of Toh Chee Boon (“TCB”), the plaintiff’s site manager for the Sengkang site from 2003 to 2005, who deposed in his affidavit of evidence-in-chief that:

[36] When NKE was referred to TCB’s evidence, his response was simply that TCB was lying because he was an engineer and was not in charge of scrap metal, although he admitted that he had no direct knowledge of the transactions. The plaintiff did not call anyone from the purchasers of the scrap metal to give evidence on how the sale and the payment were made, or anyone from the plaintiff’s accounts department to state who had handed over the $41,560.30 (see [31] and [32] above).

[37] The plaintiff had not established that the defendant was involved in the sale of the scrap metal and the collection of payment, or that he had failed to account for the proceeds of the sale. This claim fails.

[38] The plaintiff alleged in its Statement of Claim that:

and sought “an indemnity and/or damages to be assessed” in respect of the defendant’s purported failure.

[39] At para 14 of the F&BP, the plaintiff pleaded that the defendant’s obligation arose by oral agreement between the defendant and LLH, and also by implication under the defendant’s employment contract as site foreman.

[40] In its closing submissions, however, the plaintiff’s claim took the form of a claim for special damages:

without amending their Statement of Claim to claim this specific sum.

[41] At the close of its case the plaintiff submitted that:

[42] The defence was that the defendant was not in charge of maintaining the warehouse.

[43] The oral agreement allegation was not followed up. The alleged oral agreement between the defendant and LLH was never raised with the defendant and LLH when they were cross-examined and the plaintiff adduced no evidence of such an oral agreement.

[44] The implied term contention was similarly not developed. There was no evidence or reason put forward to show that by his appointment as Site Foreman and Plant and Machinery Manager, the defendant was liable for the maintenance of the warehouse. A site foreman’s responsibilities, as the designation indicates, would reasonably relate to worksites, and not a warehouse. Likewise, the post of Plant and Machinery Manager cannot imply an obligation on the employee to be responsible for the maintenance of the employer’s warehouse. For this reason, this claim fails.

[46] In its Defence and Counterclaim (Amendment No 1) the defendant counterclaimed against the plaintiff that:

[47] The plaintiff’s defence to the counterclaim was in the following terms:

[48] Ground (a) in para 11 (see [47] above) was not a further ground, but rather, an expansion of the allegation in para 10. Grounds (b) to (f) were the five heads of the plaintiff’s claims which have been dealt with.

[49] In the course of the hearing, the plaintiff amended para 11 by adding a further ground, that:

[50] As I have ruled against the plaintiff’s five claims, the plaintiff’s defence on grounds (b) to (f) must fail, and only ground (a) remains to be considered.

[51] On this issue, the plaintiff called one witness, their driver Koh Thiam Yong (“KTY”) who deposed in his affidavit of evidence-in-chief that:

[52] The two Thai workers were not called as witnesses. They were identified as Uthit Thongmoon and Thanaphon Nanthasing, and the plaintiff arranged for them to make statutory declarations. In their statutory declarations, which were admitted as agreed documents they stated that they were instructed by the defendant to go to the warehouse to remove carton boxes with the marking “AZ”. They went to the warehouse with KTY and found three boxes with the marking but they were prevented by a security guard from taking them out of the warehouse.

[53] The “AZ” markings were significant. NKE acknowledged that they referred to AZ Associates Pte Ltd (“AZ”) which was LLH’s company, and that AZ shared the warehouse with the plaintiff.

[54] The evidence the plaintiff relied on did not substantiate their allegation. There was no evidence that the boxes contained the plaintiff’s documents, or indeed any documents. As the boxes were likely to have been the property of AZ, there was no evidence that their removal from the warehouse was wrongful.

[55] The defendant denied that he had disposed of the equipment or received the proceeds of sale.

[56] The main witness for the plaintiff on this issue was Teng Kok Keng (“TKK”), a partner of Cheong Machinery Equipment (“CME”). CME dealt with machinery; the plaintiff, through the defendant, had rented machinery from CME and sent machinery to CME to be repaired.

[57] TKK’s evidence was that the defendant had agreed to sell to CME two bar benders and one bar cutter for $2,000, and payment was made to the defendant in cash. TKK produced CME’s payment voucher for the purchase dated 11 November 2006 and asserted that the defendant had signed on the voucher as the receiving party when he received the payment a few days after 11 November 2006.

[58] TKK added that he collected the two bar benders from the plaintiff’s worksite at Toa Payoh. His evidence was that he had bought the equipment from the defendant and that he informed the plaintiff’s site foreman, Lee Peng Nguan (“LPN”) that the defendant had instructed him to remove the bar benders because they had been sold to him.

[59] The plaintiff’s case was that they did not know about this transaction when it took place. In May 2007, the plaintiff was trying to locate the bar benders and bar cutters and learnt from LPN of the equipment that was taken by TKK. When they sought clarification from TKK, he told them that he had purchased them and sent them a copy of the purchase voucher as evidence of the sale.

[60] When they received the payment voucher, the plaintiff’s staff found that they did not have a copy in their records, and that the signature of the recipient on the payment voucher did not appear to be the defendant’s signature. They sought further confirmation from TKK and received a letter from CME, signed by him, dated 4 June 2007 confirming that they had bought the two bar benders and the bar cutter on 11 November 2006 for $2,000, and had paid the purchase price in cash to the defendant.

[61] LPN was also called as a witness at the trial. His evidence was that TKK told him that the defendant had asked him to remove some equipment and he allowed TKK to remove one bar bender and one bar cutter, but he was not asked at the trial whether TKK had told him the reason for taking the equipment away.

[62] The disposal of the equipment and the payment of the purchase price was the subject of criminal proceedings against the defendant in DAC 15743/2008 on the charge that he:

[63] LPN was a witness for the prosecution in that trial, and some of the court transcripts of the evidence were produced and tendered in evidence by the defendant. The parties had agreed that the transcripts were admissible in the current proceedings. The transcripts recorded that LPN testified that TKK told him that the equipment were taken away to be repaired.

[64] The defendant was eventually acquitted on the charge, and his acquittal was admissible in evidence in the present proceedings under s 45A(1) of the Evidence Act (Cap 97, 1997 Rev Ed):

The fact that he did not commit criminal breach of trust was relevant to the issue of the disposal of the equipment and the accounting for the proceeds.

[65] On a review of the evidence, taking into account that:

I find that there are questions over the reliability of TKK’s evidence, and the plaintiff has not proved that the defendant had sold the equipment or retained the proceeds of sale.