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Grounds publishedDecided 13 Jul 2016
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Court of Appeal

Eng Chiet Shoong and others v Cheong Soh Chin and others and another appeal

[2016] SGCA 45Case no. Civil Appeal No 97 of 2014

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Grounds of decision

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  1. Introduction

  2. [2] We pause to observe (parenthetically) that there has in fact been much academic writing on the legal principles relevant to this appeal. This stems – in large part – from an “industry growth” in the law of unjust enrichment. As this court observed in Wee Chiaw Sek Anna v Ng Li-Ann Genevieve (sole executrix of the estate of Ng Hock Seng, deceased) and another [2013] 3 SLR 801 (at [99]), “[t]he law of unjust enrichment is still developing and there remain … many unresolved issues (and even controversies)” (see also generally, from the Singapore perspective, Rachel Leow and Timothy Liau, “Unjust Enrichment and Restitution in Singapore: Where Now and Where Next?” [2013] Sing JLS 331 (“Leow & Liau”)). Whilst this is inevitable in a relatively fledgling area of the law, the court – in dealing with real facts and real parties – must nevertheless have a stable base of legal principles from which to apply the relevant law to the relevant facts of the case before it.

  3. [4] As alluded to above, the present appeal – fortunately – does not require a resolution of thorny legal issues. However, as some of them were canvassed in the course of the parties’ written and oral submissions, we will touch briefly on them although we will not endeavour to resolve them until they are next raised directly before the court for decision.

  4. Facts

  5. [6] The relevant facts have been helpfully set out in some detail by the Judge in the GD and we have therefore, inter alia, drawn from there for the purposes of the present judgment.

  6. [7] The Wees are members of a prominent banking family in Singapore. Cheong Soh Chin (“CSC”) is the mother of Wee Boo Kuan (“BKW”) and Wee Boo Tee (“BTW”). The Wees inherited considerable wealth from CSC’s husband, who passed away in 1992.

  7. [8] ECS’s wife, Sylvia Lee Siew Yuen (“Sylvia”), was the trusted private banker to CSC’s husband for many years. Over time, the Wees came to regard Sylvia as a trusted family friend. Even after CSC’s husband died in 1992, Sylvia remained in touch with the Wees. ECS came into the picture in 2003, when Sylvia introduced him to the Wees. At that time, ECS worked for the Government of Singapore Investment Corporation (“GIC”) as a senior vice-president of GIC Special Investments Pte Ltd, which is the arm of GIC that specialises in PE investments.

  8. [9] The Wee brothers, while already sophisticated investors, were nevertheless relative strangers to PE funds. ECS told them about the “obscene” profits that could be reaped from this asset class and obliged them when they wanted to learn more. In 2003 and 2004, ECS schooled the Wee brothers on PE funds, including how they were structured and how fund managers and investors made profits. He shared his expertise in investing in PE funds and told them of the close personal relationships he enjoyed with the world’s leading PE fund managers. He offered to introduce them to these managers so that they could invest directly in PE funds rather than through intermediaries, which would entail another layer of fees. Impressed by ECS’s knowledge and fascinated by the prospect of investing in PE funds, the Wee brothers came to see ECS as their trusted mentor in this field.

  9. [10] By early 2004, ECS hit upon the WWW concept. Under this funds business concept, ECS, BKW and BTW would set up their own investment fund, seeded with the Wees’ capital, find other investors for the fund, and collect management fees from running the investment fund. The WWW concept was essentially a way for the Wee brothers and ECS to combine the latter’s industry knowledge and personal relationships with the former’s considerable capital and appetite for risk to enable all parties involved to profit from PE investments both as a fund manager and as an investor. As the WWW concept was a long-term vision and due to their close personal relationship, the parties did not enter into any contractual arrangements governing their rights and obligations in connection with the steps they would take towards fulfilling the WWW concept and what would happen if it failed.

  10. [11] The first step was to build a name and track record for themselves in PE investments. To this end, the Wee brothers and ECS started to work towards setting up their own PE fund. The Wees were to supply all the necessary capital for the fund, while ECS would provide the industry expertise and relationships, and oversee as well as manage the fund’s investments. This initial fund was to be a fund of funds, ie, a fund that invested in other PE funds. Once the fund had a history of good performance, it would become the first fund under the WWW concept and the Wees would sell down part of their investment to external investors.

  11. [12] In late 2004 or 2005, ECS introduced BKW and BTW to investment opportunities in PE funds which were managed by some of the world’s leading fund managers. The Judge found that the Wees made an initial investment of US$30m in the initial PE funds and that over the subsequent months, the Wees committed another US$100m to the additional PE funds. After ECS left his former employer in August 2005, C S Partners Pte Ltd (“CSP”) was set up the following month by Sylvia to provide “integrated services to families on wealth protection and wealth creation”.

  12. [13] The Wees agreed to pay ECS an annual management fee that was calculated at 1.5% of an initial commitment amount of US$30m, or US$450,000, for managing the initial PE funds. The initial PE funds were meant to be the Wees’ personal fund of funds, which brought it outside the WWW concept. However, no agreement was made to pay management fees in relation to the additional PE funds.

  13. [14] The Wees also took stakes in five direct investments, so termed as these investments involved the acquisition of equity through special purpose vehicles (“SPVs”) and not through investments in PE funds. The direct investments included Project Plaza, which concerned the purchase, demolition and redevelopment of a hotel called the Esplanade Hotel in Albany, Western Australia. As was the case with the additional PE funds, no agreement on management fees was made in relation these direct investments, including Project Plaza.

  14. [15] The initial PE funds, the additional PE funds and the five direct investments (including Project Plaza) were held through a network of 24 SPVs controlled by the Engs but established and maintained using the Wees’ funds. The holding structure was designed to mimic how a PE fund would hold these investments and to facilitate an eventual sale of all or part of the Wees’ interests in these investments to incoming PE investors.

  15. [17] The Engs accepted that the 15 PE funds, the five direct investments and the majority of the SPVs through which the Wees’ entire portfolio was held belonged to the Wees, but nevertheless opposed the Wees’ claim. They also mounted a counterclaim in response, the result of which is the subject of the present appeals. In the court below, the Engs’ counterclaim concerned about US$17m in management fees and related expenses connected to their work done in relation to the Wees’ investments over the years.

  16. Decision in the court below

  17. [19] Of relevance to these appeals is the Judge’s dismissal of substantially the whole of the Engs’ counterclaim. The Judge found that the parties were not in a client-service provider relationship. Rather, they were joint risk-runners working together towards the WWW concept (see the GD at [51]), with the expectation that all their rewards would come when the WWW concept succeeded (see the GD at [69]). This explained why the parties never had an agreement on fees (beyond the agreement to pay management fees for the initial PE funds).

  18. [20] In the premises, he found that the Engs were not entitled to management fees for the additional PE funds. There was no basis to imply a contract that the Wees would pay the Engs management fees of 1.5% of the commitment amount of the additional PE funds (see the GD at [82]). Neither were the Engs entitled in restitution on a quantum meruit. Among other reasons, he found that the Engs had performed their services speculatively, in anticipation of being compensated out of the profits of the WWW concept. They therefore took the risk that future compensation would not materialise (see the GD at [87]).

  19. [22] The Judge determined that Project Plaza was also part of the WWW concept. Therefore, he rejected the Engs’ claim for management fees and expenses for Project Plaza in restitution on a quantum meruit. The Engs worked and incurred expenses with the expectation of recovering compensation through the rewards that would come with the anticipated success of a hotel fund as part of the WWW concept (see the GD at [98]). In so far as the expenses were concerned, he found no overarching agreement for the Wees to foot all the expenses incurred by the Engs for Project Plaza. Instead, the parties had entered into specific agreements from time to time to cover specific expenses (see the GD at [99]). Therefore, the Engs had to bear all the expenses incurred in connection with Project Plaza, except where there had been specific agreements that the Wees would bear these expenses. These specific agreements would be factored in during the taking of the account.

  20. [23] The Judge also rejected the Engs’ claim for US$0.5m in breakup and facilitation fees for the sale of certain funds (the CVC funds and PEP funds) (see the GD at [93]–[95]), which had been sold in 2010, and another claim for about US$319,150 for work done in administering the Wees’ other investments (see the GD at [107]–[108]).

  21. [24] On 27 June 2014, the Engs filed CA 97 to appeal the dismissal of their counterclaim. On the same day, the Wees filed CA 99 to appeal that part of the Judge’s decision that required the Wees to pay management fees for the initial PE funds even after they commenced their claim on 18 April 2012 and until the date that their investments were returned to them.

  22. Issues

  23. [25] In so far as CA 97 is concerned, the key issues are as follows:

  24. (a) whether the Engs are entitled to management fees for the additional PE funds either on an implied contract or in restitution; and

  25. (b) whether the Engs are entitled to management fees for Project Plaza.

  26. If we answer either question in the affirmative, an ancillary issue is the quantification of the fees.

  27. [26] In so far as CA 99 is concerned, the issue is whether the Wees are obliged to pay management fees for the initial PE funds after the commencement of legal proceedings on 18 April 2012.

  28. Our decision

  29. General Principles

  30. Introduction

  31. [27] As alluded to at the outset of this judgment, this particular sphere of law does present a number of difficult legal issues. In the apt words of Prof Ewan McKendrick (see Ewan McKendrick, “Work Done in Anticipation of a Contract which does not Materialise” in ch 11 of W R Cornish, Richard Nolan, Janet O’Sullivan & Graham Virgo (eds), Restitution Past, Present and Future – Essays in Honour of Gareth Jones (Hart Publishing, 1998) (“McKendrick”) (at p 163):

  32. In the essay just referred to, Prof McKendrick focuses (correctly, in our view) on the contractual and restitutionary approaches. The other possible legal routes towards recovery (including tort, equitable or promissory estoppel and breach of a duty of good faith and fair dealing) were then – and still are – in a relatively embryonic state (and in so far as the last-mentioned doctrine is concerned, see the decisions of this court in Ng Giap Hon v Westcomb Securities Pte Ltd [2009] 3 SLR(R) 518 and The One Suites Pte Ltd v Pacific Motor Credit (Pte) Ltd [2015] 3 SLR 695 at [44]).

  33. [28] Generally speaking, recovery of compensation for work done in situations where there is no express contract may, as we have just noted, be premised on either contractual or restitutionary grounds. The former is generally premised on an implied contract since, ex hypothesi, there is (subject to one possible situation which will be mentioned below (at [30])) no express contract to begin with. The general principles which are potentially applicable were in fact helpfully explored in a relatively recent joint article to which we are greatly indebted: see Man Yip & Yihan Goh, “Liability for work done where contract is denied: contractual and restitutionary approaches” [2012] LMCLQ 289 (“Yip & Goh”). Indeed, in this article, the learned authors argue that the possible approach that may be adopted is not necessarily a binary one – and that both contractual and restitutionary approaches could possibly be adopted (the suggested common element being the defendant’s assumption of the risk of financial responsibility) – but that the contractual approach should take precedence over the restitutionary approach.

  34. Contract

  35. [29] In so far as the contractual approach is concerned, we agree with Yip & Goh that the implied contract under which compensation for work done is recoverable will not be implied unless it is necessary to do so (see Yip & Goh at 291). And as the learned authors note (at 292; see also the decision of this court in Cooperatieve Centrale Raiffeisen-Boerenleenbank BA (trading as Rabobank International), Singapore Branch v Motorola Electronics Pte Ltd [2011] 2 SLR 63 at [38] (and the authorities cited therein)):

  36. Conceptually, at least, such an implied contract could also take the form of a collateral contract (see also generally K W Wedderburn, “Collateral Contracts” [1959] CLJ 58 (“Wedderburn”), Paul S Davies, “Anticipated Contracts: Room for Agreement” [2010] CLJ 467 (“Davies”) at 471−474, Yip & Goh at 293−295 as well as the decision of this court in Ang Sin Hock v Khoo Eng Lim [2010] 3 SLR 179 (“Ang Sin Hock”) at [73]−[76]). However, the key motif remains the same – the courts will only locate an implied contract in very limited circumstances based on necessity and having regard to the intentions of the parties. What this means in practical terms is that the precise facts and circumstances of each case will be of the first importance. Indeed, Prof Hedley’s vigorous response to McKendrick and his extremely enthusiastic reliance on the contractual approach appears to presuppose a favourable fact situation to begin with (see Steve Hedley, “Work done in Anticipation of a Contract which does not Materialise: A Response” in ch 12 of W R Cornish, Richard Nolan, Janet O’Sullivan & Graham Virgo (eds), Restitution Past, Present and Future – Essays in Honour of Gareth Jones (Hart Publishing, 1998) (“Restitution Past, Present and Future”)). However, as just mentioned, the contractual approach ought not to be applied liberally. Notwithstanding, for example, Wedderburn’s observation that the collateral contract had “value” as a “weapon of justice” (see Wedderburn at 85), the countervailing need for certainty should also be borne in mind. And, as this court observed in Ang Sin Hock at [76]:

  37. [30] It will be noted that we have hitherto referred to possible recovery of compensation pursuant to an implied contract. As already alluded to above, there could not, ex hypothesi, be recovery pursuant to an express contract which does not exist to begin with. However, it is also possible that there might be an express contract which does not contain an express term with regard to the remuneration that ought to be paid for work done by the plaintiff. In such a situation, it is entirely conceivable that the court concerned might imply a term that a reasonable sum be paid by the defendant to the plaintiff (see, for example, the decision of this court in Lee Siong Kee v Beng Tiong Trading, Import and Export (1988) Pte Ltd [2000] 3 SLR(R) 386 (“Lee Siong Kee”) at [30], the Singapore High Court decision of MGA International Pte Ltd v Wajilam Exports (Singapore) Pte Ltd [2010] SGHC 319 (“MGA International Pte Ltd”) at [113]−[116] and the UK Supreme Court decision of Benedetti and another v Sawiris and others [2014] AC 938 (“Benedetti”) at [9]; though cf the decision of this court in Gold Coin Ltd v Tay Kim Wee [1985−1986] SLR(R) 575 (“Gold Coin Ltd”) at [9]−[10] (where both an implied contract as well as implied terms are mentioned)). As is the case with implied contracts, the implication of a term in this last-mentioned situation will also be based upon necessity by reference to the traditional “business efficacy” and “officious bystander” tests (and see generally the decisions of this court in Lee Siong Kee at [30], Foo Jong Peng and others v Phua Kiah Mai and another [2012] 4 SLR 1267 and Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appeal [2013] 4 SLR 193).

  38. [31] In the present case, it should be noted that the Engs relied, in the main, on an implied contract in relation to the additional PE funds. Although counsel for the Engs, Mr Alvin Yeo SC (“Mr Yeo”), also submitted on the alternative basis premised on work done pursuant to an anticipated contract that had failed, he clarified during oral submissions before this court that the anticipated contract that had failed was not the contract based on the WWW concept but, rather, on a contract to pay management fees. This last-mentioned point brings us to the next set of possibly applicable principles centring on the restitutionary approach.

  39. Restitution

  40. [32] From an historical perspective, a claim for a reasonable sum for work done based on the doctrine of quantum meruit in a situation where there was no contract (whether express or implied) found its source in what was known as quasi-contract. The concept of quasi-contract itself was a nebulous creature and claims based on this concept (including quantum meruit) involved the use of a fiction (see generally J H Baker, “The History of Quasi-Contract in English Law” in ch 3 of Restitution Past Present and Future, especially at pp 37, 42−44 and 53−54, John H Langbein, “The Later History of Restitution” in ch 4 of Restitution Past, Present and Future, ch VIII of A W B Simpson, A History of the Common Law of Contract – The Rise of the Action of Assumpsit (Clarendon Press, Oxford, 1987), especially at pp 489 and 496−499; as well as Warren Swain, The Law of Contract 1670−1870 (Cambridge University Press, 2015) at pp 121−126).

  41. [33] It is now generally acknowledged that the doctrine of quantum meruit is more appropriately classified under a claim in restitution or (perhaps more accurately) unjust enrichment (see also, for example, Benedetti at [9]). As, for example, has been observed in Charles Mitchell, Paul Mitchell & Steven Watterson (eds), Goff & Jones – The Law of Unjust Enrichment (Sweet & Maxwell, 8th Ed, 2011) at para 1-06:

  42. [34] And, in a similar vein, Prof Peter Birks has observed thus (see Peter Birks, Unjust Enrichment (Oxford University Press, 2nd Ed, 2005) at p 284):

  43. [35] Whilst there has been some academic discussion as to the basis for the award of a claim in quantum meruit in the context of unjust enrichment, it is notable that there has been no real controversy that such a claim does indeed exist as part of (formerly) the law of quasi-contract and (presently) the law of unjust enrichment. One persuasive reason for such an award has been suggested by Prof McKendrick who observed thus (see McKendrick at p 181):

  44. A slight digression with regard to terminology

  45. [37] As we have already noted, the plaintiff can be compensated for work done in contract pursuant to either an implied contract or an implied term (see above at [28] and [30]). In both situations, however, the amount of remuneration or compensation payable to the plaintiff concerned will be a reasonable sum. On a plain reading, such an award would be consistent with the literal meaning of the term “quantum meruit”, which when translated from the Latin means “as much as he has deserved” (see Bryan A Garner (ed in chief), Black’s Law Dictionary (Thomson Reuters, 10th Ed, 2014) (“Black’s Law Dictionary”) at p 1437; David M Walker, The Oxford Companion to Law (Clarendon Press, Oxford, 1980) (“The Oxford Companion to Law”) at p 1022; and J A Simpson & E S C Weiner (eds), The Oxford English Dictionary (Clarendon Press, Oxford, 2nd Ed, 1989), vol XII (“OED”) at p 982). Not surprisingly, perhaps, this particular mode of recovery has been referred to as contractual quantum meruit – which has been contrasted with recovery pursuant to what has been referred to as restitutionary quantum meruit (which was the topic of the preceding part of this judgment). This distinction between contractual quantum meruit and restitutionary quantum meruit is, in fact, well-established in Singapore case law (see, for example, the decisions of this court in Gold Coin Ltd at [9]−[10] and Lee Siong Kee at [29]−[37], the Singapore High Court decisions of Rabiah Bee bte Mohamed Ibrahim v Salem Ibrahim [2007] 2 SLR(R) 655 at [122]−[124], MGA International Pte Ltd at [113] and Sim Kim Seng (trading as Kim Seng Ship Building) v New West Coast Shipyard Pte Ltd [2016] SGHCR 2 at [15]; as well as Cheshire, Fifoot and Furmston’s Law of Contract – Second Singapore and Malaysian Edition (Butterworths Asia, 1998) at pp 1127−1130).

  46. [38] However, whilst the distinction between contractual quantum meruit on the one hand and restitutionary quantum meruit on the other appears to be clearly established (see also, for example, G H L Fridman, “Quantum Meruit” (1999) 37 Alberta Law Rev 38), the concept of quantum meruit appears to be more appropriate terminology in the context of the latter (as opposed to the former). This is reflected, for example, in Black’s Law Dictionary, where quantum meruit is defined as follows (at p 1437):

  47. It can be immediately seen that, whilst there is a fleeting reference to contract, the focus is really on restitution or unjust enrichment. One explanation is perhaps that this is a publication that emanates from the United States of America (where restitution and unjust enrichment are very well-established compared to its continuing development in the Commonwealth (including Singapore (see generally Leow & Liau)) – although the OED also appears to adopt a similar focus (at p 982 (“A reasonable sum of money to be paid for services rendered or work done, when the amount due is not determined by any provision constituting, or forming part of, a legally enforceable contract”) – albeit doing so as a general (as opposed to a law) dictionary). That having been said, the current editor in chief of Black’s Law Dictionary, Prof Garner, does, in another work, acknowledge that quantum meruit is a term that may in fact be “ambiguous” inasmuch as it might also refer to recovery on a contractual basis (see Bryan A Garner, A Dictionary of Modern Legal Usage (Oxford University Press, 2nd Ed, 1995) (“A Dictionary of Modern Legal Usage”) at p 724):

  48. [39] There are, admittedly, also other definitions which appear to be neutral (see, for example, Daniel Greenberg (ed), Stroud’s Judicial Dictionary of Words and Phrases (Sweet & Maxwell, 8th Ed, 2012) at p 2414 (“Quantum meruit is the reasonable amount to be paid for services rendered or work done, when the price therefore is not fixed by contract …”)). These definitions do not – at least on a literal reading – preclude premising an obligation on the defendant to pay the plaintiff on the basis of an implied contract. However, in another work, the same editor appears to treat the concept of quantum meruit as focusing more on restitution or unjust enrichment instead (see Daniel Greenberg (gen ed), Jowitt’s Dictionary of English Law (Sweet & Maxwell, 3rd Ed, 2010), vol 2 at p 1857; see also the preceding paragraph):

  49. [40] There are yet other definitions which are wholly consistent with the distinction between contractual quantum meruit and restitutionary quantum meruit. The following definition in David Hay (gen ed), Words and Phrases Legally Defined (LexisNexis, 4th Ed, 2007), vol 2 at p 717 is an example:

  50. Reference may also be made, in this regard, to The Oxford Companion to Law at p 1022 (“Another possible measure of restitution in case of unjust enrichment …, or measure of payment where a contract has not fixed a price.”) as well as A Dictionary of Modern Legal Usage at p 724 (above at [38]).

  51. [41] To summarise, perhaps the most practical and commonsensical approach is to look to the substance rather than the form. In this regard, it is clear that there are two alternative approaches toward the award of a reasonable sum for work done by a plaintiff. The first is contractual in nature and can be premised on the basis of either an implied contract or an implied term (depending on the precise facts before the court). The second is premised on restitution or unjust enrichment (the more historical basis being that of quasi-contract). The first will take precedence over the second. From a terminological perspective, it might be more appropriate – particularly when viewed from an historical perspective − to reserve the use of the term “quantum meruit” only for the second (ie, restitutionary) basis, whilst referring to the first (ie, contractual) basis simply as recovery pursuant to “contract” (whether by way of an implied contract or an implied term). This last-mentioned approach was, in fact, adopted in Yip & Goh.

  52. [42] Let us turn now to apply the principles to the facts of the present case.

  53. CA 97

  54. The additional funds

  55. [43] It is of the first importance to recapitulate as well as understand the precise nature of the arguments that were made by Mr Yeo on behalf of the Engs in support of their counterclaim (which included work done with respect to both the additional PE funds and Project Plaza).

  56. [44] It will be recalled that Mr Yeo had argued, first, that there was an implied contract between the Engs and the Wees that the latter would pay the former management fees in return for the former managing the additional PE funds (on top of managing the initial PE funds for which it was common ground that a fee arrangement existed). As Mr Yeo put it during oral submissions before this court, there was a simple management contract between the Engs and the Wees and the WWW concept was not part of this relatively simple arrangement, although the parties conducted their affairs in broad alignment with this idea. He further argued that either party could have pulled out of the WWW concept at any time. This last-mentioned argument was, in fact, related to Mr Yeo’s alternative argument that even if an implied contract between the parties is not found, the parties had nevertheless intended that such a (management) contract would ultimately have been entered into and that, to this end, the Engs had managed the additional PE funds pursuant to an anticipated (management) contract that had not ultimately materialised and were thus entitled to remuneration for such work done with regard to the additional PE funds on the basis of a claim in quantum meruit.

  57. [45] It is clear that, central to both of Mr Yeo’s arguments, as set out briefly in the preceding paragraph, is the fact that either the alleged implied contract or the work done in managing the additional funds in relation to an anticipated (management) contract that had not ultimately materialised was (as Mr Yeo was also at pains to emphasise during the course of oral submissions before this court) completely outside the scope or purview of the WWW concept, which was simply a vision and a plan. This was, presumably, to completely distance the Engs from the Judge’s finding in the court below that the counterclaim by the Engs was bound to fail owing to the fact that they (ie, the Engs) had embarked upon a risk-running exercise with a view towards being remunerated only upon the fruition of the WWW concept – that, in other words, the work performed by the Engs in the meantime was done at their own risk as the material rewards would only crystallise once the WWW concept had come to fruition.

  58. [46] With respect, we are unable to accept Mr Yeo’s arguments. Based on the evidence before us, it is clear that the parties had – at least in relation to the additional PE funds – the WWW concept in view. Let us elaborate.

  59. [47] The key document is the e-mail from ECS to BKW dated 24 October 2007 (“the 24 October 2007 e-mail”). Before examining this document, we embark on a slight detour of sorts to lay out the preceding exchange of e-mails, which will enable us to obtain a clearer understanding of the 24 October 2007 e-mail. Around October 2007, as the parties’ involvement with one another deepened, CSC (described in the correspondence as the chairman) became concerned about the fees and other arrangements. This led BKW to forward a list of “Chairman Questions” to ECS on 8 October 2007. These queries touched on various aspects, including ownership and agreements. ECS replied four days later to BKW and BTW (copying Sylvia) to explain as follows (“the 12 October 2007 e-mail”):

  60. [48] ECS was, however unclear, by what CSC meant by agreements. Thereafter, BKW explained on 16 October 2007 in an e-mail to ECS (copying BTW and Sylvia) that his mother would like to formalise agreements to “prevent potential misunderstanding”. On 22 October 2007, BKW wrote an e-mail titled “G1 package” to ECS, again stating that “Chairman wants me to formalize agreement with you to prevent potential misunderstanding … So need you to put on your thinking cap again!” On 24 October 2007, BKW sent yet another reminder to ECS, telling him that CSC was “still chasing me for this” so “perhaps you could just pen down some key points”. This led to ECS’s 24 October 2007 e-mail, to which we presently return.

  61. [49] The material part of the 24 October 2007 e-mail reads as follows:

  62. [50] It is significant that the very first paragraph of the 24 October 2007 e-mail quoted in the preceding paragraph refers to the WWW concept – in particular to the Limited Partnership Agreements which relate to third party investors and which (in turn) would signal the fruition, so to speak, of the WWW concept – at least in an incipient manner. In particular, this paragraph sets the backdrop against which the rest of the e-mail ought to be interpreted. Having referred to the WWW concept (for which, it will be recalled, there would be no remuneration forthcoming to the Engs until the concept itself came to fruition), the second paragraph of the e-mail provides an exception or carve-out inasmuch as it does in fact specify a separate method of remuneration by way of a management fee. In this regard, “the FOF 30” is, in fact, a reference to the initial PE funds – where it was indeed common ground that these funds were outside the scope or purview of the WWW concept. That “the FOF 30” refers to the initial PE funds can be gleaned from e-mail correspondence which segregated the Wees’ investment in the initial PE funds from their investment in the additional PE funds. On 23 October 2007, a day before the 24 October 2007 e-mail, ECS informed the Wees that:

  63. [51] Indeed, the 1.5% annual management fee for “the FOF 30” mentioned in the 24 October 2007 e-mail was precisely the fee agreed upon by the Wees and the Engs in respect of the management of the initial PE funds. If, in fact, the additional funds were also to be subject to the same arrangements as the initial funds, this ought also to have been indicated in the 24 October 2007 e-mail as well – but, significantly, in our view, was not. Mr Yeo had no convincing explanation for this. We note that the 24 October 2007 e-mail came after repeated requests for ECS to consider his remuneration. It is also significant that, by this this time, the commitment amount had risen to about US$83m. Even by August 2008, by which time the commitment amount had risen to US$129m, the management fees continued to be paid based on 1.5% of US$30m (see the GD at [77] and [84]). This in fact supports the Wees’ case that the additional PE funds were not subject to a separate management contract but were, instead, intended to be part of the WWW concept (for which any remuneration would be forthcoming only upon the fruition of that part of the concept itself).

  64. [52] This brings us to the third – and final – paragraph of the 24 October 2007 e-mail, which refers to a “termsheet”. For the period preceding the 24 October 2007 e-mail, the only term sheet available on record is one that was handed to the Wees on 13 August 2005 (“the 2005 term sheet”). This term sheet contained details relating to three funds and two deals. What is of signal importance is that the 2005 term sheet, while obviously a draft, was intended to be an at least rough outline of what would constitute the WWW concept. It is significant, in our view, that the 2005 term sheet refers to both the initial PE funds and the additional PE funds. The column relating to “Fund 1” must be taken to relate to the initial PE funds. For example, the fund size for “Fund 1” is stated to be US$30m – which matches the initial commitment amount that the Wees had already committed to as of the date of the term sheet. Potential investors were stated to be “N/A” to “Fund 1”, which suggests that this fund was not intended to draw capital from other investors. In particular, “Fund 1” states that the management fee for those funds is 1.5% per annum – which is what the parties had in fact agreed to for the initial PE funds. More importantly, it was common ground between the parties that the initial PE funds were not intended to be part of the WWW concept. The natural inference, therefore, is that Fund 1 was (as already mentioned) intended to be an exception to (or carve-out from) the overall WWW concept.

  65. [53] There is, admittedly, no clear (and, more importantly, specific) reference to the additional PE funds although there are two further columns which refer to “Fund 2” and “Fund 3”, respectively. However, the particulars of both “Fund 2” and “Fund 3” contemplated, inter alia, potential investors, a management company and investment in the management company (with two or three-way splits in its shareholdings). Mr Yeo’s case was that the additional PE funds were not “Fund 2” in the 2005 term sheet. “Fund 2” was only to be started after the parties had established a track record in “Fund 1”, which would be some years down the road owing to the nature of PE funds. However, it is difficult to ignore the fact that “Fund 2” was stated to have a fund size of US$100 to US$150m, which is comparable to the commitment amount of the additional PE funds. Mr Yeo also made the point that, even though the initial PE funds were to involve a US$30m commitment, the Wees subsequently committed to more funds without segregating between the initial PE funds and the additional PE funds. There was never any point in time where the commitment amount stood at US$30m. On this view, the additional PE funds should be seen as a mere extension of the initial PE funds. However, this is contradicted by e-mail documentation that shows that the Engs demarcated the PE funds into house funds (the initial PE funds) and third party funds (additional PE funds) (see above at [50]).

  66. [54] Bearing in mind the relatively early days in which the 2005 term sheet was produced, it is sufficiently clear, in our view, that the additional PE funds were clearly envisaged to be part of “Fund 2” or even “Fund 2” and “Fund 3”, combined. What is important for the purposes of the present appeal is the fact that, unlike “Fund 1”, the particulars of “Fund 2” and/or “Fund 3” (see above at [53]) suggest that they were intended to be part of the WWW concept – which, in turn, means (consistent with the analysis just proffered) that the additional PE funds were (contrary to what Mr Yeo had argued) in fact intended to be part of the WWW concept. In our view, these are eminently reasonable inferences to draw simply because it could not possibly have been within the contemplation of the parties that none of the three funds mentioned in the 2005 term sheet would form part of the WWW concept. Indeed, as we have already noted, even “Fund 1” was prima facie to form part of the WWW concept – until that prima facie assumption was displaced by an agreement by the parties to the contrary. Indeed, there has clearly been no express agreement to the contrary vis-à-vis the additional PE funds. It will be recalled that Mr Yeo has premised the Engs’ case for recovery under either an implied contract or on a restitutionary quantum meruit premised on a specific management contract between the parties with respect to the additional PE funds that had failed to materialise. With respect, we find these (alternative) arguments unpersuasive. Indeed, if this court were to imply a contract, that would mean – in substance – that the 2005 term sheet would not reflect what it was in fact intended to reflect in the first place, viz, the WWW concept. Put simply, the exception (as was the situation with regard to “Fund 1”) would become the (overwhelming) rule instead – a rule which would run wholly contrary to the common intention of the parties to work towards the fulfilment or fruition of the WWW concept.

  67. [55] In the circumstances, it is clear, in our view, that the additional PE funds were within the scope or purview of the WWW concept, and the Engs’ arguments with regard to this particular issue therefore fail.

  68. [56] Let us turn now to consider the Engs’ arguments with regard to Project Plaza.

  69. Project Plaza

  70. [57] It would appear that the same conclusion which was arrived in respect of the additional PE funds ought also to be arrived at with regard to Project Plaza. In particular, it will be recalled that hotel investments were one category in the initial categories formed for the purposes of the WWW concept. In the 12 October 2007 e-mail (see above at [47]), ECS stated that the parties were establishing three Limited Partnership Agreements or LPAs, including one for “RE/Hotel direct investments”. The very first paragraph of the 24 October 2007 e-mail conceivably refers to these same LPAs which, as explained above (at [50]), sets the backdrop against which the rest of that e-mail ought to be interpreted. In the light of these two e-mails, the fact that ECS failed to ask for management fees for Project Plaza prima facie suggests that, unlike the initial PE funds, there was to be no carve-out for the work done in relation to Project Plaza.

  71. [58] This lends credence to the theory that the Engs were to be remunerated for their work in relation to Project Plaza only through the fruition of the WWW concept. The original plan, according to the Wees, was that they would provide only seed capital of US$25m, with ECS promising to obtain bank loans and/or interested investors – limited partners (“LPs”) – to fund the redevelopment of the hotel. When the hotel was re-developed, it would form the “nucleus of a [h]otel [f]und”. The “unique selling proposition” to attract potential LPs was that the hotel fund would have an “actual physical hotel built and run as a working model”. Indeed, there is evidence that the Engs attempted to seek such external financing. Moreover, the words “Project Plaza” and “hotel fund” were occasionally mentioned in the same breath.

  72. [60] As is the situation generally in so far as the present case is concerned, there is an unfortunate dearth of evidence and this court will have to do the best it can with the little evidence that is in fact available. However, it is sufficiently clear that the work done on Project Plaza was not necessarily in furtherance of the WWW concept, even though Project Plaza was linked to a hotel fund and the relevant SPV structures had been set up.

  73. [61] We turn, first, to the relevant e-mail correspondence. Perhaps the most important e-mail is that sent by ECS to BKW dated 22 July 2008 (“the 22 July 2008 e-mail”), as the plain language of that particular e-mail refers to the management of Project Plaza by the Engs. The material part of the e-mail reads as follows:

  74. [62] There does not appear to be any written response by BKW to ECS, which would militate against the plain meaning contained in the words of the e-mail quoted in the preceding paragraph. Leaving aside for the moment the precise amount which the Engs are entitled to, it does appear to suggest that there was in fact a separate agreement to the effect that the Engs would be paid management fees for the management of this particular project. This would, ex hypothesi, take this project outside the scope and purview of the WWW concept, which (it will be recalled) was premised on (and as the Judge also found in the court below) the concept of risk-running, which (in turn) was premised on the understanding between the Wees and the Engs that any work done by the latter would not be separately remunerated but would ultimately witness both parties being able to reap the benefits by sharing in the fruits of the WWW concept when it did in fact materialise. At this juncture, it should be noted that it was unclear – to this court at least – what precisely the parties envisaged were the “fruits” of the WWW concept. However, this is immaterial for the purposes of the present appeal given the fact that Mr Yeo had – in his case theory in support of recovery of compensation for the Engs – eschewed the relevance of the WWW concept altogether. In particular, Mr Yeo had argued that the Engs were entitled to compensation on the basis that the work that they had rendered with regard to both the additional funds as well as Project Plaza were outside the scope and purview of the WWW concept altogether.

  75. [63] In fairness to the Wees, however, it should be noted that BKW’s testimony during cross-examination suggests that the amount mentioned in the e-mail referred to in the preceding two paragraphs related to the operating expenses with regard to Project Plaza. In his affidavit of evidence-in-chief, BKW had similarly said that the “clear understanding between [the parties] was that this amount was to be used for Project Plaza expenses”. Even if this is indeed the case, the e-mail suggests, at the very least, that the Engs had nevertheless sought management fees for work done on Project Plaza. For while the Engs appear to accept that the US$1m was for expenses, they make the larger point that the Wees had agreed to set aside funds for the operating expenses only after the parties failed to reach an agreement on management fees. The relevant part of BKW’s cross-examination is reproduced as follows:

  76. [64] BKW did not deny that the agreement to cover operating expenses arose directly from the failure to agree on management fees on Project Plaza. On further questioning, he characterised the US$1m which the Wees paid towards the operating expenses of Project Plaza as “part of the management fee” (albeit of the “WCP Plaza fund”). Whether the true situation is that the parties made a separate agreement to the effect that the Engs would be paid management fees or that the US$1m payment was simply a “fall back” to cover operating expenses after the parties discussed management fees, the salience of management fees in either case suggests that Project Plaza was outside the scope of the WWW concept.

  77. [65] Our findings so far are in fact, supported by the relevant context as well. Let us elaborate.

  78. [66] First, whilst we have already noted that it was possible for Project Plaza to have fallen within the WWW concept, it is significant, in our view, that the only term sheet which was in evidence (viz, the 2005 term sheet which we had referred to earlier in the context of the issue relating to the additional PE funds), whilst referring to the initial funds as well as the additional funds, did not refer to Project Plaza at all. This is consistent with the Engs’ argument that Project Plaza was a discrete project that was outside the scope and purview of the WWW concept.

  79. [67] The 24 October 2007 e-mail, which, as we have found, made reference to the 2005 term sheet, did not refer to Project Plaza as well. At this juncture, we digress to address an argument that may be made, as Mr Philip Jeyaretnam SC (“Mr Jeyaretnam”) did on behalf of the Wees, that ECS had not provided a carve-out for management fees for Project Plaza in that particular e-mail. This would suggest that Project Plaza was akin to the additional PE funds in that both investments would be remunerated under the WWW concept. However, as we have observed, the 2005 term sheet, which ECS said he would pull out for a “revisit”, did not even refer to Project Plaza. This indicates that the fee arrangements that were being contemplated at the relevant time did not cover Project Plaza. This is plausible as the discussions on remuneration in October 2007 concerned the “G1 package”, ie, ECS’s fees, and did not address Sylvia’s remuneration, even though she was in the thick of the project. Indeed, it might not have been an opportune time to seek fees for Project Plaza. Although the parties bought Esplanade Hotel by August/September 2006 and demolished it around February 2007, the nature and scope of the Engs’ involvement in Project Plaza remained hazy even in October 2007. In February 2007, BKW relinquished his role as the Project Plaza Consultant (“the PPC”) because his wife fell seriously ill. Following that, Sylvia was forced to step up to the plate and take on more work while discussions and attempts were made to find a replacement for BKW. Moreover, issues with, inter alia, the design of Project Plaza meant that Project Plaza had not even gotten off the ground. As BKW said in cross-examination, “things were stuck” and the project “was not moving”. To compound matters, Project Plaza had run into funding issues, which led BKW to ask on 8 October 2007 if the parties should “wait for more positive signs or [get] someone else to start [the hotel fund] or … initiate this?”

  80. [71] Thirdly, it has been clearly established that the heavy lifting for Project Plaza was in fact, undertaken by the Engs – in particular ECS’s wife, Sylvia. Indeed, BKW had to leave active participation in Project Plaza as the PPC owing to unexpected (and unfortunate) circumstances, as his wife had been taken critically ill. This was in February 2007, when she was unfortunately diagnosed with cancer. In an e-mail dated 15 March 2007, BKW told Sylvia that he would continue to provide strategic input for a maximum of one to two hours a week but would not be dealing with day to day matters. In BKW’s own words, “Sylvia took over and ran the project”. It was only at the end of January 2009, when Sylvia asked him to return to Project Plaza, that he decided to do so. That Sylvia undertook the heavy lifting in the interim is evident from the e-mail correspondence, such as that between BKW and her in April 2008, as well as further e-mail correspondence thereafter. And as Mr Yeo rightly pointed out in oral closing arguments before the Judge:

  81. Consonant with the extent of her role, Sylvia herself also expressed her concern about the need for funds; in an e-mail dated 14 August 2008 to BKW, for example, she stated as follows:

  82. In another e-mail dated 25 September 2008, Sylvia wrote to BKW as follows:

  83. BKW later stated that as the estimated costs for Project Plaza shot up to more than US$100m, the understanding between the parties evolved to one where the hotel fund would contain only Project Plaza. He claimed that ECS represented to him that it was nevertheless possible to obtain bank loans and investors even before the hotel was re-developed, ie, before it was up and running. Therefore, even under the evolved plan for the hotel fund, the Wees were presumably still expected to put in only US$25m in “seed money”. There appears to be some support for BKW’s version in an e-mail dated 25 September 2008 in which he wrote to Sylvia (“the 25 September 2008 e-mail”), the material parts of which read as follows:

  84. [73] Indeed, BKW also expressed his concerns during cross-examination that Sylvia had allegedly misrepresented to his mother (the first plaintiff in the main claim) the fact that US$100m was required inasmuch as the Wees would be funding Project Plaza in its entirety, thus giving her (his mother) the wrong impression (which was also contrary to what he stated was his own perception as briefly set out in the preceding paragraph).

  85. [74] However, BKW’s concerns were not borne out by the relevant e-mails from Sylvia (as set out above) and are, in fact, contradicted by them. We do note, in this regard, that there was an e-mail dated 25 September 2008 from Sylvia to BKW, which stated as follows:

  86. BKW responded to the above e-mail on the same day, and which stated as follows:

  87. [75] But what, then, about the 25 September 2008 e-mail (which has been quoted above at [72])? At first blush, this particular e-mail would appear to support BKW’s version. However, a closer reading of this e-mail suggests that it is, at best, neutral.

  88. [77] ECS responded to this e-mail on 13 June 2008 as follows (“the 13 June 2008 e-mail”):

  89. [78] In cross-examination, BKW stated that the mention of US$25m in the 12 June 2008 e-mail was in reference to the seed funding for the hotel fund. However, as Mr Yeo pointed out to him, the 12 June 2008 e-mail was in fact the first document which referred to a US$25m net budget. This casts doubt on whether the parties had in fact agreed that the Wees would limit their involvement in Project Plaza to “seed money” of US$25m. Given that at the time, the parties were discussing ways to finance the project externally, it is plausible, notwithstanding BKW’s disagreement, that the US$25m figure was in fact derived from their estimates of the external funding that they could secure for the project (see the preceding paragraph where ECS’s response to the 12 June 2008 e-mail is quoted).

  90. [80] As Project Plaza wore on (and the fall-out from the global financial crisis intensified), the parties were still far from reaching a landing on the hotel fund as it related to Project Plaza. This is evident from an e-mail discussion in October 2008 between BKW and ECS following CSC’s query on the “budget requirements from WWW for [Project Plaza] before making a decision”:

  91. [82] In fairness to the Wees, though, a couple of (closely related) points in their favour with regard to this particular issue ought to be dealt with at this juncture. It should be noted, first, that the parties, including BKW, did refer, on occasion, to a “hotel fund” (see, for example, his e-mail dated 25 September 2008, reproduced above at [74]). Before the full effects of the global financial crisis set in, ECS had, in an e-mail on 29 October 2007, also informed BKW that one of his friends had set up his first fund of funds which raised US$440m. This friend was “now shooting for USD 1 billion”. In response, BKW asked, rather exuberantly, if they could “make the quantum leap even for doing FOF and H Funds (ie everything we do!)?” To that, ECS replied: “Clearly that is doable. First step PP / Branded hotel fund, then the ‘direct investment programme’ followed by FOF. …”

  92. [83] However, such references must be viewed against the backdrop and context set out in the preceding paragraphs – in particular, the fact that Sylvia had been shouldering the bulk of the work for Project Plaza which (together with, inter alia, the substantive attention as well as input of BKW (especially with regard to the design of the hotel)) pointed to the conclusion that this particular project was a discrete project for which management fees were indeed payable. Whilst it did have some resonance with the WWW concept (and, hence, the parties’ reference to a “hotel fund”, as just noted), it appears, in our view, to be akin to the initial PE funds inasmuch as it appeared to constitute a test bed of sorts in so far as a “hotel fund” was concerned (it being common ground, as we have already noted, that the initial PE funds ought therefore to be remunerated separately). Looked at in this light, there is no inconsistency as such between the parties’ reference to a “hotel fund” on the one hand and the discrete nature of Project Plaza itself on the other.

  93. [84] Secondly, and also in fairness to the Wees, we also note that Sylvia had also referred to the need to utilise Project Plaza to establish a “brand strategy” with regard to the WWW concept. For example, in an e-mail dated 24 September 2008 to BKW, she stated as follows:

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