Hong Kah Ing v Tee Kim Leng and others [2024] SGHC 321

The plaintiffs pleaded in the statement of claim that the defendant was in breach of contract. The plaintiffs say that the 4th to 7th plaintiffs were at the material time partners in a Malaysian law practice, Han & Partners (“H&P”). The defendant was a majority shareholder in a Singaporean company, Far East Mining Pt Ltd (“FEM”). Sometime in October 2016, H&P, the defendant, FEM and one other individual (“Nasser”) were parties to an agreement where H&P would introduce and broker the acquisition of all the shares in one of FEM’s wholly owned Indonesian subsidiaries (the “Transaction”). The Transaction was to be a reverse takeover which would result in FEM obtaining a controlling stake in Silkroad Nickel Ltd (“Silkroad Nickel”), a Singaporean company. For its role in the Transaction, the defendant, FEM and Nasser undertook to pay H&P S$15,000,000 (the “Consideration Sum”). The Consideration Sum was to be paid by the issue of new ordinary shares in Silkroad Nickel (the “Consideration Shares”) to H&P and its nominees.

After the Transaction was completed sometime in July 2018, the defendant, Nasser and/or FEM failed to complete the transfer of the Consideration Shares to H&P, despite repeated requests and demands. H&P’s partners then commenced HC/S 1210/2018 (“Suit 1210”) seeking specific performance of the transfer of the Consideration Shares. The 4th plaintiff (acting on behalf of H&P) and the defendant (acting on behalf of himself, Nasser and FEM) entered into an oral settlement agreement (the “Oral Settlement Agreement”) sometime in February 2019 to settle Suit 1210. The Oral Settlement Agreement provided that the defendant and FEM accepted joint liability and responsibility to repay to the 4th plaintiff (on behalf of H&P) the full Consideration Sum. This would comprise a cash settlement portion and the transfer of the balance amount of the Consideration Shares. The 4th plaintiff would nominate the 1st, 2nd and 3rd plaintiffs to be H&P’s nominees and trustees under this agreement to hold the balance Consideration Shares. In consideration of the Oral Settlement Agreement, the 4th plaintiff (on behalf of H&P) agreed to discontinue the suit.

Despite various requests from the 1st to 3rd plaintiffs, the defendant had failed to transfer the Repayment Shares. According to the plaintiffs, this was a breach of the Oral Settlement Agreement and the Agreement, for which Suit 947 was commenced. By the present action, the plaintiffs seek an order for specific performance by the defendant to transfer the Repayment Shares, and alternatively, damages for breach of the Oral Settlement Agreement as evidenced and reflected by the Agreement.

The defendant relies on three of the grounds provided for in O 18 r 19(1) of the Rules of Court (2014 Rev Ed) (“ROC 2014”) to strike out the plaintiffs’ statement of claim. First the defendant says that the plaintiffs have no reasonable cause of action as the Agreement is not enforceable for a lack of consideration and there was no breach of the alleged Oral Settlement Agreement (if it existed). According to the defendant, he had performed his obligations under the Agreement and validly tendered performance because he had made several unsuccessful attempts to transfer the Repayment Shares. The defendant also says that the 4th to 7th plaintiffs should be struck out as it is clear that no Oral Settlement Agreement was ever entered into between the parties. Second, for the same reasons, the defendant says that the plaintiffs’ claim should be struck out for being frivolous or vexatious. Third, the defendant says that the plaintiffs’ continued prosecution of their claim in this suit is an abuse of the court’s process in light of the fact that the defendant had validly tendered performance (by his various attempts to transfer the Repayment Shares).

In my view, there is no basis for the plaintiffs’ statement of claim to be struck out and the defendant’s appeal in this regard is dismissed. The power to strike out pleadings should only be exercised in plain and obvious cases. Where an application for striking out “involves a lengthy and serious argument, the court should decline to proceed with the argument unless” there are doubts as to the soundness of the pleading and the court is satisfied that “striking out will obviate the necessity for a trial” (Gabriel Peter & partners (suing as a firm) v Wee Chong Jin and others [1997] 3 SLR(R) 649 at [18]). There is no such plain and obvious defect with the plaintiffs’ statement of claim. On the contrary, it pleads the plaintiffs’ case clearly and concisely — they are claiming against the defendant for breaches of an oral agreement, and a subsequent written agreement which they had entered into with the defendant in exchange for withdrawing Suit 1210 (see [2]-[5] above).

The same cannot be said of the submissions put forth on behalf of the defendant. In my view, they are lengthy and serious arguments and their place is at the conclusion of trial, when evidence on both sides have been adduced. Whether the Agreement is enforceable or not enforceable for lack of consideration is a finding that the court has to arrive at after the evidence has been fully explored at trial. It is not evident from the plaintiffs’ statement of claim alone that there has been no consideration. Similarly, whether there has been a breach of the Oral Settlement Agreement (if it existed), and whether the defendant had validly tendered performance, are findings the court has to make after trial. I do not express a view as to how the terms of the alleged Oral Settlement Agreement should be interpreted, save to say that the defendant’s reading of the terms does not pass muster in establishing that the plaintiffs’ statement of claim is defective. Likewise, the question of whether an Oral Settlement Agreement was ever entered into between parties and its impact on whether the 4th to 7th plaintiffs have a claim in the present action is one to be decided at trial.