Lim Koon Park v Yap Jin Meng Bryan and others [2016] SGHC 29

This judgment is supplemental to this court’s judgment in Lim Koon Park v Yap Jin Meng Bryan and others [2015] SGHC 284 dated 29 October 2015 (“the main judgment”) which related to the inquiry before this court to determine the plaintiff’s 25% share of the net profit made by Riverwealth from the sale of its two properties at River Valley Road (“the Properties”). In order to determine the plaintiff’s profit entitlement, this court had to ascertain the allowable deductions from the gross profits made by Riverwealth, which exercise was the subject of the main judgment. Pursuant to [91] of the main judgment, parties appeared before this court again to deal with two outstanding issues not resolved in the main judgment viz:

(a) Costs for the 7 days’ assessment; and

(b) Interest payable to the first defendant on his loan of $22,580,621.99 (“the principal sum”) to Riverwealth as allowed by the Court of Appeal in Lim Koon Park and another v Yap Jin Meng Bryan and another [2013] 4 SLR 150 (“the CA judgment”)

At the inquiry, the first defendant presented a figure of $3,091,130.28 as his claim for interest (see [10] of the main judgment).

In the two days’ hearing before this court, the parties were unable to agree on the method of computing the first defendant’s claim for interest, let alone the quantum, despite the plaintiff’s production of exhibits P5 and P6 and the first defendant’s new charts in exhibits D3 to D6, on the various permutations of interest calculations. The court had rejected the first defendant’s initial calculations in exhibit D2 as it was shown to be flawed – interest therein had (but should not have) been calculated on the principal sum on a straight line basis because the principal sum was not drawn down all at once but periodically as and when required.

Although the first defendant rectified his error in D2, his subsequent computations of interest in exhibits D3 to D6 were also not acceptable to the plaintiff as there was disagreement on how the GST refund of $3,395,902.70 (“the GST refund”) to Riverwealth made on 1 September 2008 should be treated – as repayment of interest or of capital on the principal sum or both in equal proportions.

In the result, the court decided to and did order the parties to file written submissions to show the quantum of (compound) interest chargeable on the principal sum at 7.5% per annum calculated on monthly rests. Parties were told that once the ceiling of the principal sum was reached, no interest would accrue on any amount in excess of the principal sum (“the excess”). However, whenever the principal sum was reduced to a figure below the excess, whether it was due to the GST refund or partial repayments of the principal sum, the further advances made by the first defendant could be added onto the principal and interest continues to accrue until the next time the excess is again reached when it will stop. This exercise would continue until the principal sum was fully repaid on or about 28 December 2009.

The plaintiff’s submissions

The plaintiff presented two alternative computations for the court’s consideration, as reflected in Tables A and B attached to this judgment. In Table A, the plaintiff showed that the principal sum was reached for the first time on 28 April 2008. That being the case, no interest would accrue on the excess. Whenever a part-payment/refund of the principal sum was made, the same would be correspondingly reduced and interest would accrue on the principal sum until it was again exceeded. The plaintiff’s computation deducted $1m of the principal sum before calculating the interest chargeable. Based on Table A, the plaintiff arrived at a figure of $2,909,827.56 as interest due to the first defendant.

In Table B, the plaintiff’s computation was based on the principal sum with the $1m equity for Riverwealth deducted at the end viz on 30 September 2008. The amount of interest computed in table B was $2,975,830.02.

I had pointed out to counsel for the plaintiff that while it was common ground that the first defendant did inject $1m as equity into Riverwealth, nothing was said in the CA judgment that $1m should be deducted from the principal sum or that interest should only be charged on the reduced amount of $21,580,621.99. Reading the CA judgment, I am of the view that the CA must have arrived at the quantum of the principal sum net of the $1m equity injected into Riverwealth. Despite the court’s reminder to counsel however, the plaintiff’s computations of interest in Tables A and B made deductions of the $1m equity contribution. Consequently, I reject both Tables A and B and the computations of interest amounting to $2,909,827.56 and $2,975,830.02 respectively.

The first defendant’s computation

I turn now to the first defendant’s computation of interest which is contained in Table C. The first defendant’s computation is based on the court’s direction in [4] and showed a figure of $2,990,263.79. This figure is just $14,433.77 more than the plaintiff’s figure of $2,975,830.02 in Table B. The shortfall in the plaintiff’s interest calculation could well be due to plaintiff’s deduction of $1m from the principal sum for equity contribution. I see no reason not to accept the first defendant’s computation of interest and accordingly I award him interest of $2,990,263.79 for his loan of the principal sum to Riverwealth.

The plaintiff’s 25% share of the net profit made by Riverwealth

With the issue of interest payable by Riverwealth to the first defendant finally resolved, the quantum of the plaintiff’s 25% share of the net profit (now crystallised at $3,178,279.49) made from the sale of the Properties could be determined. The first defendant’s submission (at para 19 of his written submissions) calculated the plaintiff’s profit to be $794,569.87. That meant that Andy’s 25% share would be the same (if proven in Suit No. 1057 of 2013) while the first defendant’s 50% entitlement would be $1,589,139.74. The plaintiff’s entitlement to $794,569.87 is based on the following computation:

Deductions allowed in [86] of the main judgment

Net

Sale price

$60,080,000.00

Purchase price

($48,500,000.00)

i. i. $5,108,676.58

ii. ii. $300,000.00

($5,408,676.58)

Balance:

$6,171,323.42

Add :

i. Further (agreed) deduction

ii. Interest to 1st Defendant on loan to 2nd Defendant

$2,780.14

$2,990,263.79

($2,993,043.93)

Net Profit on the sale of the Properties

$3,178,279.49 ÷ 4

Plaintiff’s 25% entitlement to net profits on the sale of the Properties

$794,569.87

The above computation is based on the figures in [86] of the main judgment (save for the preceding interest calculation itself). The court was informed by counsel on 25 November 2015 that the previously disputed amount of $2,780.14 had now been accepted by the plaintiff without the need for further submissions. That sum was a global figure described as “for payments between end 2007 to May 2008” (at para 10 in the first defendant’s AEIC filed for the assessment hearing (on 30 March 2015) as well as in his AVA (at para 60) filed on 4 April 2015. The sum comprised, inter alia, entertainment expenses incurred by the plaintiff and travel expenses incurred by Clarence Tan. I would also add that Clarence Tan’s 2.5% share of the net sale profits (pro-rated) is to come from the profits of the plaintiff and the first defendant pending the determination of Andy’s claim in Suit No. 1057 of 2013.

Costs

Second, the discount was also to reflect the court’s disapproval of the plaintiff’s repeated (and futile) arguments in court and in his final submissions that no interest was payable on the first defendant’s loan to Riverwealth despite the CA judgment holding to the contrary.

As counsel for the plaintiff made the concession, the first defendant is allowed a further deduction of $5,000 (plus disbursements on a reimbursement basis) for preparing the five affidavits in [11] relating to formal proof of numerous documents which were rendered otiose when counsel for the plaintiff decided the deponents need not be called.

The plaintiff is awarded judgment for the sum of $794,569.87 in [9]. Pursuant to the CA judgment, the plaintiff is entitled to interest on the said sum at 5.33% per annum from the date of the writ (16 March 2010) to the date of the CA judgment (22 July 2013). Pursuant to O 42 r 12 of the Rules, the plaintiff is awarded further interest at 5.33% per annum from the date of this judgment until payment of the said sum.

For purposes of appeal under O 57 r 4(c) of the Rules, time runs from the date of this Supplemental Judgment.