Stone Forest Consulting Pte Ltd v Wee Poh Holdings Ltd

MPH Rubin J:

[2] Wee Poh is listed on the Stock Exchange of Singapore. The principal activities of Wee Poh and its subsidiaries (collectively called “the Group”) include the design and construction of infrastructure works, bored piling and foundation works, and the sale of ready-mix concrete, granite, sand and cement. It would appear from the facts presented that for the financial year ending 30 June 2001, the Group incurred a loss after tax of about $7m. The auditors of the Group were concerned and expressed their views that the Group’s viability was in peril unless it was able to raise additional funding to meet its anticipated cash requirements for the year ending 30 June 2002. The Group also owed its suppliers and sub-contractors some $23m. Several legal actions had been filed against the Group and a number of the Group’s creditors had already obtained judgment against it. The upshot was that the Group had a funding shortfall of approximately $6.5m.

[3] In this milieu, Wee Poh approached Stone Forest, which specialises in financial consultancy services, for its assistance and eventually engaged it with the following key objectives in mind:

(a) to review together with the management the Group’s projected revenue and cash inflow stream;

(b) to review together with the management an immediate action plan to reduce costs, improve revenue, speed up collections, maximise capacity and divest surplus assets;

(c) to assess the funding requirements for the Group for the next 24 months; and

(d) to assist in working out a restructuring plan with all banks and other creditors.

[4] The terms of Stone Forest’s engagement are spelt out in Stone Forest’s letter dated 10 December 2001 (“the first letter of engagement”) which was duly accepted in writing by Wee Poh on 11 December 2001.

[5] In so far as is material, cll 2 and 3 of the first letter of engagement provide as follows:

[6] Following its engagement, Stone Forest rendered services and submitted its invoices to Wee Poh in due course. Stone Forest also rendered some additional services between 1 February 2002 and 31 May 2002. Stone Forest’s charges in respect of these services amounted to $233,103.32. The invoices rendered by Stone Forest and part payments made by Wee Poh on the said invoices are particularised under para 1 of the statement of claim as follows:

[7] For some reason, Wee Poh did not make any further payments to Stone Forest after 29 April 2002 and as a result, Stone Forest commenced this action for the remaining balance of $348,715.73.

[8] The defence filed was unusually skimpy and on the face of it appeared contradictory. In the first paragraph of the defence, Wee Poh denied paras 1 and 2 of Stone Forest’s claim that the latter rendered services and tendered its invoices to Wee Poh. However in para 3 of the defence, Wee Poh averred that Stone Forest’s fees should only be “billable” [sic] upon successful completion of certain transactions. In so far as is material, paras 3, 4 and 5 of the defence read:

[9] Stone Forest, in the event, applied for summary judgment. In the first affidavit of Mr Tay Woon Teck, a director of Stone Forest filed on 8 December 2003, Mr Tay drew the court’s attention to a board resolution of Wee Poh dated 8 November 2002 which reads as follows:

[10] Wee Poh, in its first affidavit filed on 19 January 2004, implied that the Board resolution was obtained by Stone Forest under pressure. Mr Chew Yin What, a director of Wee Poh who affirmed the affidavit averred:

[11] In view of such a clear and unambiguous resolution from the board of a public company admitting that services were rendered to it by Stone Forest, and further, recording an unmistakable agreement to pay Stone Forest the sums of $233,103.32 and $110,000, the senior assistant registrar entered judgment for the plaintiffs. Wee Poh appealed against the order of the senior assistant registrar and the appeal was heard by me on 21 April 2004.

[12] Segments of the arguments presented by the solicitors for Wee Poh on appeal require reproduction and they read thus:

[13] I found the foregoing arguments to be entirely unmeritorious as they tended to ignore and gloss over the very admission and the undertaking as to payment contained in the said board resolution, duly passed and signed by six directors of Wee Poh, a public listed company.

[14] Counsel for Wee Poh tried in vain to circumvent the resolution by claiming that the resolution was an internal document. I found this argument also to be disingenuous for two reasons. First, a copy of the resolution was admittedly handed over to Stone Forest by Wee Poh and second, a listed entity, having acknowledged that services had indeed been rendered to it in a formal document, could not be heard to resile from that statement on nebulous grounds.

[15] The next contention raised by counsel for Wee Poh was that the parties had entered into a second letter of engagement on 22 February 2002 under which Stone Forest undertook to assist Wee Poh in marketing and negotiating with some strategic investors. It is not necessary to refer to the second letter of engagement at any length at this stage except to point out that the second letter of engagement concerned a fresh matter and that fees payable for services under the second letter did not straddle services rendered under the first letter of engagement. At any rate, the board resolution under reference was passed on 8 November 2002 (“the resolution”), some eight months after the second letter of engagement. The resolution did not, in any manner or form, dispute services rendered by Stone Forest under the first letter of engagement.

[16] Counsel for Wee Poh further argued that under the resolution Wee Poh agreed to pay Stone Forest only from new moneys raised by Wee Poh. He contended that “new monies” in the resolution meant those moneys raised with the plaintiffs’ assistance. According to him, the “new monies” which came into Wee Poh were not through the assistance of Stone Forest. I must say presently that the attempted introduction of the phrase “with the plaintiffs’ assistance” after the words “new words raised by the company” in sub-para (a) of the resolution, owed more to expediency than to reason or logic.

[17] In my view, the arguments based on the second letter of engagement were totally irrelevant to the issues at hand. There was a very clear acknowledgement of the services rendered by Stone Forest to Wee Poh and an equally express undertaking to make payments to Stone Forest under the first letter of engagement. Wee Poh’s present attempt to delay payment to Stone Forest reeked of disingenuity and, in my determination, was wholly unjustified.

[18] Having regard to all the evidence placed before the court, I was satisfied that the arguments raised by Wee Poh were neither bona fide nor appeared to possess a semblance of a valid defence to warrant the court to grant it even conditional leave. As observed by Jessel MR in Anglo-Italian Bank v Wells (1878) 38 LT 197 at 201, “when the Judge is satisfied not only that there is no defence but no fairly arguable point to be argued on behalf of the defendant it is his duty to give judgment for the plaintiff”.