General Division of the High Court · Decided 15 February 2024

Peck Wee Boon Patrick and another v Lim Poh Goon and others

[2024] SGHC 44Case no. Suit No 148 of 2022

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Evidence Act 1893

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Introduction
[1] This is a claim by Peck Wee Boon Patrick (“Mr Peck”) and Ding Siew Peng Angel (“Mdm Ding”) (collectively, the “plaintiffs”) under a written agreement relating to a residential construction project.
[2] The essence of the plaintiffs’ claim is that they were promised attractive returns on their financial contribution towards a residential construction project by the first defendant, Lim Poh Goon (“LPG”). This promise was recorded in a written agreement (the “Agreement”) between the plaintiffs and the third defendant, Haixia Crystal Construction Pte. Ltd. (“HXC”). HXC undertook the construction of the project. Unfortunately for the plaintiffs, the alleged promise never materialised, and they were neither repaid their contribution nor given their returns. The plaintiffs claim that this amounted to fraud.
[4] The plaintiffs, therefore, seek to pursue their claim against Haixia Crystal Development Pte. Ltd. (“HXD”), the fourth defendant and the developer of the residential property involved in the project, and Lim Poh Quee (“LPQ”), the second defendant and the director of HXD. The parties agree that the focus of this trial is against LPQ and HXD. The plaintiffs’ claim against LPQ and HXD raises a broader legal issue which is: to what extent can the law hold separate legal entities accountable for the allegedly fraudulent scheme perpetrated by another entity? The plaintiffs allege that the very close association amongst LPG, HXC, LPQ and HXD (collectively, the “defendants”) was of such an extent that LPQ and HXD should be found liable for the alleged fraud perpetrated by LPG and his corporate vehicle, HXC. The plaintiffs have gone as far as to allege that LPQ and HXD were complicit in the alleged fraudulent scheme of LPG and HXC. LPQ and HXD deny their involvement in the alleged scheme.
[5] I shall first summarise the background to the dispute before addressing the main issues.
Background to the dispute
The parties and companies involved
[6] The plaintiffs are husband and wife.
[7] The first defendant is LPG. According to the records of the Accounting and Corporate Regulatory Authority (“ACRA”), at the time of the Agreement, LPG was the company secretary of HXD and a shareholder of HXC. LPG is currently the sole director and shareholder of HXC.
[8] The second defendant is LPQ. LPQ and LPG are brothers. At the time of the Agreement, LPQ was the sole director and a shareholder of HXC and also a director of HXD. LPQ is currently the sole director of HXD.
[9] The third defendant is HXC, a company incorporated in Singapore. HXC is in the business of general contractors (building construction and significant upgrading works) and general contracts (non-building construction). At the time of the Agreement, LPQ was the sole director and a shareholder of HXC, while LPG and LPG’s wife, Luo Hai Xia, were shareholders of HXC. At and around the time of the Agreement, HXC was the main contractor for the redevelopment of the property at 10 Jalan Shaer Singapore 769357 (“Original 10JS”).
[10] The fourth defendant is HXD. HXD is a special-purpose vehicle set up to facilitate real estate development. At or around the time of the Agreement, HXD owned two properties: the Original 10JS and a property situated at Fidelio Street (“FS”). At the material time, HXD had: (a) nine shareholders; (b) four directors, one of whom was LPQ; and (c) one company secretary, who was LPG.
[11] Both HXC and HXD were named after LPG’s wife, Luo Hai Xia.
[12] For ease of reference, Annex 1 of this judgment sets out the Table of the Change in Directorships and Shareholding for HXC and HXD from 30 March 2012 to 14 March 2022, as prepared by the plaintiffs.
Involvement of LPQ
[13] In August 2017, LPQ left his previous job and joined HXC. LPG allegedly told him that he would be made a director and shareholder of HXC. LPG resigned as a director of HXC and LPQ was appointed as the sole director of HXC. LPQ was also made a shareholder of HXC, together with LPG and his wife.
The purchase of the Original 10JS and the incorporation of HXD
[14] In September 2017, an Option to Purchase (“OTP”) for the Original 10JS was issued to “LPG and/or nominee” in consideration for an option fee of $33,800. The purchase price of the Original 10JS was $3.38m.
[15] Shortly thereafter, in October 2017, HXD was incorporated to facilitate the redevelopment of the Original 10JS. On incorporation, LPQ was the sole shareholder and the only director of HXD (see Annex 1). Soon after, LPG was appointed as the company secretary of HXD. On 15 November 2017, three other persons, namely, Yam Tie Chuan (“Mr Yam”), Lee Tian Sher and Er Tian Sion (“Mr Er”), were appointed directors of HXD, in addition to LPQ. At the same time, LPQ was removed as a shareholder of HXD and nine other persons were added as shareholders.
[16] On 16 November 2017, LPQ, as a director of HXD, exercised the OTP in respect of the Original 10JS on behalf of HXD.
[17] On 23 July 2018, the four directors of HXD (ie, LPQ, Mr Yam, Lee Tian Sher and Mr Er) executed a resolution (the “2018 HXD Resolution”). The 2018 HXD Resolution recorded the names of the nine shareholders in HXD at that time, together with LPQ and HXC, against their respective contributions for the purchase and redevelopment of the Original 10JS. The financial contributions of all 11 parties were referred to as “loans” to HXD.
How the plaintiffs became involved
[19] In early 2018, the plaintiffs engaged LPG and his company to rebuild their house at Lucky Heights. Sometime in July or August 2018, LPG allegedly told the plaintiffs that he could offer them a chance to invest in the redevelopment project of the Original 10JS (the “10JS Project”).
[20] LPG allegedly told the plaintiffs that the Original 10JS was a single plot of land which could be subdivided into two plots of land with a house on each plot. I shall refer to these subdivided properties as “10 JS” and “10A JS” respectively, and as “the redeveloped 10JS properties” collectively. The redeveloped 10JS properties could then be sold to interested buyers. Further, LPG allegedly informed the plaintiffs that he had purchased the Original 10JS at a price of $3.38m and intended to sell the redeveloped 10JS properties for a total of at least $6m. LPG allegedly told the plaintiffs that he was confident that the 10JS Project would be profitable.
The meeting on 18 August 2018 and the Agreement
[21] On 18 August 2018, LPG and the plaintiffs allegedly met for further discussions on the 10JS Project. At this meeting, LPG allegedly assured the plaintiffs that the 10JS Project would be profitable, and that it was popular and heavily subscribed to by investors. LPG allegedly showed the plaintiffs the 2018 HXD Resolution to demonstrate that there were many investors in the 10JS Project and that HXC had a $1.7m stake in the project. Further, LPG allegedly told the plaintiffs that the 10JS Project would minimally yield a 20% profit for them, and that this would be received by the plaintiffs once the 10JS Project was sold or had obtained its Temporary Occupation Permit (“TOP”).
[22] At this meeting, LPG allegedly told the plaintiffs that he was prepared to share 20% of HXC’s $1.7m stake in the 10JS Project if the plaintiffs invested a sum of $340,000 (the “Investment Sum”). LPG also allegedly told the plaintiffs that the money provided by them would be used solely and exclusively for the 10JS Project.
[23] As reassurance to the plaintiffs, LPG allegedly told them that he was the owner and controller of HXC and HXD, and that his brother, LPQ, was a sleeping partner who had left everything related to HXC, HXD and the 10JS Project to him. Thus, LPG was able to control all aspects of the 10JS Project to ensure that the plaintiffs’ investment would be safe and profitable.
[24] The plaintiffs eventually agreed to make a financial contribution of $340,000. To record this contribution, the plaintiffs and LPG (signing as director of HXC) executed a one-page written document which formed the Agreement. The Agreement was prepared by one of LPG’s staff. The Agreement referred to the contribution of the plaintiffs as a “[loan] to [HXC] for the redevelopment of [the Original 10JS]”. The plaintiffs’ contribution was stated to be 20% of a loan of $1.7m, with the remaining $1.36m, forming 80% of this loan, to come from HXC. Notably, the Agreement did not state the expected returns or interest, or the terms of the financial contribution.
[25] On the alleged instruction of LPG, the plaintiffs issued a cheque dated 18 August 2018 for the sum of $340,000 payable to HXD. LPG explained to the plaintiffs that the cheque was made payable to HXD rather than HXC because HXD was the developer of the 10JS Project while HXC was the builder of the project. Hence, payment was to be made to the developer to obtain a stake in the 10JS Project. LPG also assured the plaintiffs that he was in control of HXC and HXD, and that he represented both entities.
The deposit and withdrawal of the plaintiffs’ contribution
[26] The plaintiffs’ Investment Sum was deposited into HXD’s DBS bank account on 20 August 2018. Shortly thereafter, the sums of $150,000 and $190,000 were withdrawn via cash cheques on 25 August 2018 and 28 August 2018, respectively. These cash cheques were signed by LPQ and another director of HXD, Mr Er, and were handed over to LPG.
[27] On the same day that the above sums were withdrawn, the exact amounts (ie $150,000 and $190,000) were deposited into HXC’s DBS bank account.
Change in the directorship of HXC
[28] In June 2019, LPQ ceased working for HXC.
[29] On 11 October 2019, LPG was re-appointed as the director of HXC and LPQ ceased to be the sole director of HXC. Thereafter, LPG’s and LPQ’s involvement in HXC and HXD was as follows:
Progress of the 10JS Project
[30] On 23 October 2019, an OTP in respect of 10 JS (which was one part of the Original 10JS) was issued to a third-party purchaser, with the purchase price of $3.4m, in consideration for an option fee of $680,000. This OTP was signed by LPG, on behalf of HXD as an “authorised signatory”. Cheques for the sums of $170,000 and $510,000 (totalling $680,000) were credited into HXD’s DBS bank account on 14 October 2019 and 23 October 2019 respectively.
[31] Subsequently, the sums of $170,000 and $510,000 were withdrawn from HXD’s DBS bank account via cash cheques on 15 October 2019 and 24 October 2019 respectively.
[32] On 22 January 2020, the OTP for the sale of 10 JS was exercised and the sum of $102,000 was deposited into HXD’s DBS bank account. Subsequently, on 23 January 2020, the sum was withdrawn via cash cheque from HXD’s DBS bank account.
[33] On 30 July 2020, an OTP in respect of 10A JS (which was the other part of the Original 10JS) was issued to two third-party purchasers, with the purchase price of $3.55m, in consideration for an option fee of $355,000. This OTP was signed by LPG, on behalf of HXD as an “authorised signatory”. A cheque for the sum of $355,000 was credited to HXD’s DBS bank account on 29 July 2020.
[34] On 5 August 2020, a sum of $145,000 was deposited into HXD’s DBS bank account. Later that same day, a sum of $500,000 (ie, the sum total of $355,000 and $145,000) was withdrawn via cash cheque from HXD’s DBS bank account.
[35] On 31 December 2020, HXD issued eight cheques for a total sum of $114,759.
[36] On 15 March 2021, LPQ and another director of HXD, Mr Yam, signed a letter addressed to HXC stating, among other things, that HXC’s “loan amount” of $1.7m for the 10JS Project with profit would be paid to HXC’s OCBC bank account within three days of receipt of sales payment (the “Confirmation Letter”).
[37] On 3 May 2021, LPQ and another director of HXD, Mr Yam, signed a director’s resolution which authorised any of the directors and the company secretary of HXD to sell either one or both of the redeveloped 10JS properties and ratified their actions in doing so. To the same end, the director’s resolution expressly confirmed, ratified and approved any action taken by any director or the company secretary concerning the sale of the same property(s). Accordingly, HXD had, subsequent to the OTPs signed by LPG with the purchasers of 10 JS and 10A JS on 23 October 2019 and 30 July 2020 respectively, confirmed, ratified and approved the sale of the redeveloped 10JS properties that was entered into by LPG.
[38] On 6 May 2021, the OTP in respect of 10A JS was exercised.
Change in the directorship of HXD
[39] On 16 December 2020, Mr Er ceased to be a director of HXD, leaving HXD with three directors that included LPQ.
[40] On 6 May 2021, two of the remaining three directors of HXD resigned, leaving LPQ as the sole director of HXD.
The plaintiffs’ efforts seeking repayment
[41] While Mdm Ding was initially updated by LPG or his representatives about the 10JS Project in 2019 and 2020, these updates allegedly became less frequent. On 11 May 2011, Mdm Ding, wrote an e-mail, on behalf of the plaintiffs, to HXC and addressed to LPG, stating that she understood the redeveloped 10JS properties were sold and therefore wanted to check when LPG could return their investment and profit. A picture of the Agreement was also attached to the e-mail, and Mdm Ding noted a “promised return interests 20-25%” [sic] when referring to the Agreement.
[43] On 16 September 2021, the plaintiffs received an e-mail reply from HXC, signed off by LPG, in relation to their earlier e-mails. The e-mail stated that the redeveloped 10JS properties were sold. The e-mail further stated that because the full purchase price could only be collected after obtaining “the TOP & CSC from BCA, Land Title from SLA, and Completion of after TOP works of the property” [sic], the “amount” would be paid by the end of December 2021.
[44] On 27 December 2021, Mdm Ding sent an e-mail, responding on behalf of the plaintiffs, stating that the plaintiffs were expecting “the sold property amount crediting into our account” [sic] and provided directions to issue a cheque or execute a bank transfer to them.
[45] On 30 December 2021, Mr Peck allegedly called LPG to, among other things, seek an update on the progress of the payment to the plaintiffs for the 10JS Project. During the call, LPG allegedly informed Mr Peck that the repayment was contingent on the issuance of the Certificate of Statutory Completion or TOP for the redeveloped 10JS properties. This was allegedly estimated by LPG to be within a few months.
[46] Shortly after the call, on the same day, Mr Peck sent an e-mail to HXC, addressed to LPG, to record the contents of their conversation, specifically that upon obtaining TOP of the redeveloped 10JS properties, LPG will make the repayment to the plaintiffs.
[47] Notwithstanding the e-mails and conversation between the plaintiffs and LPG and HXC, the plaintiffs received no repayment in relation to the 10JS Project. Further attempts to seek payment from LPG were rebuffed.
[48] Subsequently, the plaintiffs discovered that another suit in HC/S 8/2022 (“Suit 8”) had been commenced against the defendants by one Ang Xinwei (“Mr Ang”). Based on the cause papers filed in Suit 8 by Mr Ang, who was another investor in the 10JS Project, the plaintiffs concluded that they had been the victims of a fraud engineered by the defendants.
[49] On 29 April 2022, the plaintiffs commenced the present action and also filed an ex parte summons in HC/SUM 1668/2022 applying for an injunction prohibiting the disposal of assets in Singapore against the defendants.
The parties’ cases
The plaintiffs’ case
[52] The plaintiffs rely on a number of grounds to claim their Investment Sum paid towards the 10JS Project. As a preliminary point, the plaintiffs aver that their contribution to the 10JS Project was an “investment” as opposed to a “loan”, notwithstanding that the latter term was expressly used in the Agreement.
[53] The reliefs sought by the plaintiffs as disclosed from their Statement of Claim (Amendment No. 2) (“SOC No. 2”) are as follows:
Claim against HXC and/or LPG under the Agreement
[54] Further, the plaintiffs submit that LPG and/or HXC are liable to pay the sum of $408,000 being the Investment Sum and the promised returns under the Agreement (ie, $340,000 plus minimally 20% returns of $68,000).
[55] Alternatively, the plaintiffs submit that HXC and/or LPG are liable to pay damages to the plaintiffs for the breach and/or repudiation of the Agreement by failing to deliver to the plaintiffs their contribution and returns upon the sale of the redeveloped 10JS properties, or alternatively, by 31 December 2021 as assured by HXC.
Claim in fraudulent misrepresentation
[56] The plaintiffs claim that on or around 18 August 2018, the date of the meeting with LPG and the Agreement, LPG had made multiple representations to them about the matters relating to the 10JS Project. The plaintiffs relied on and was induced by these representations from LPG. They issued a cheque for the sum of $340,000 payable to HXD to invest in the 10JS Project.
[57] The plaintiffs allege that the representations were false and untrue. The plaintiffs aver that LPG made the representations fraudulently, and either LPG knew that they were false and untrue, or recklessly not caring about their truth with a view to induce the plaintiffs to transfer the Investment Sum so that it could be used for purposes other than for the 10JS Project.
[58] As against LPQ, the plaintiffs allege that he should be held liable for LPG’s fraudulent misrepresentations as he had placed LPG in a position whereby LPG represented that he was in control of HXD. Alternatively, LPG was authorised to act for and on behalf of HXD and/or LPQ in all matters relating to the 10JS Project. Hence, LPQ and/or HXD were bound by the acts, conduct and representations of LPG in connection with the 10JS Project.
Claim in constructive and Quistclose trusts
[59] The plaintiffs aver that a constructive trust arises in respect of their contribution and that HXD and/or LPQ are liable as constructive trustees. In relation to HXD and/or LPQ, the plaintiffs assert that HXD and/or LPQ knew or ought to have known about the Investment Sum of the plaintiffs or the receipt of the funds from the plaintiffs into HXD’s DBS bank account. Since the plaintiffs’ Investment Sum was subsequently withdrawn for unknown purposes, HXD is thus liable to account to the plaintiffs for the Investment Sum and net profit proportionate to the plaintiffs’ stake in the 10JS Project.
[60] The plaintiffs also claim against HXD under a Quistclose trust on the basis that the Investment Sum deposited into HXD’s bank account had been used for purposes other than for the 10JS Project.
Claims in dishonest assistance and knowing receipt
[61] The plaintiffs submit that LPG, LPQ and/or HXD are liable for dishonestly assisting HXC’s breach of trust or are otherwise liable in knowing receipt of the Investment Sum. LPG, LPQ and/or HXD were aware that HXC received the Investment Sum from the plaintiffs and that the Investment Sum was held by HXC on trust and for the sole purpose of the plaintiffs’ investment in the 10JS Project. Notwithstanding their knowledge, LPG, LPQ and/or HXD had diverted or applied the Investment Sum for purposes unrelated to the 10JS Project. Accordingly, a constructive trust should be imposed over the Investment Sum and any assets acquired from the usage of this sum.
Claim in unjust enrichment
[62] The plaintiffs aver that the defendants have been unjustly enriched at the expense of the plaintiffs and, therefore, they claim restitution. In the alternative, the plaintiffs aver that HXD had been unjustly enriched at the expense of the plaintiffs either on the ground of total failure of consideration or on the ground of fraudulent misrepresentation.
Claim in conspiracy
[63] Lastly, the plaintiffs claim against the defendants for conspiracy to defraud or injure by unlawful means by coming together to defraud or fraudulently misrepresent to the plaintiffs with the intention of causing them to part with their Investment Sum.
LPG’s and HXC’s case
LPQ’s and HXD’s case
[65] The essence of LPQ’s and HXD’s case is that the plaintiffs should instead look towards LPG and HXC for recovery of the amounts claimed. Any investment arrangement made was between the plaintiffs and LPG and/or HXC. LPQ and HXD had nothing to do with the Agreement. This is because prior to the commencement of the proceedings, LPQ and HXD had no knowledge of the existence of the plaintiffs and/or their dealings with LPG and/or HXC. At all material times, LPG was in control of HXC and made all decisions relating to HXC. Further, LPG is not a “shadow director” or the “true controller” of HXD. LPG had no control over HXD as he was neither a shareholder nor a director of HXD. The relationship between HXD and LPG and/or HXC was strictly at arm’s length and commercial in nature between a developer and a contractor.
[66] In relation to the claim of fraudulent misrepresentations, LPQ and/or HXD were neither a party to nor privy to the representations allegedly made by LPG to the plaintiffs about the matters relating to the 10JS Project.
[67] In relation to HXD’s receipt of and pay-out of the plaintiffs’ Investment Sum, HXD and LPQ aver that LPG had called LPQ to inform LPQ that LPG had mistakenly banked a cheque for the sum of $340,000 into HXD’s DBS bank account. HXD and LPQ claim that they knew nothing about this payment into HXD’s bank account and accepted LPG’s explanation, especially since no incoming funds were expected by HXD and LPQ. Pursuant to LPG’s request, HXD issued two cash cheques for the sums of $150,000 and $190,000, which were handed over to LPG. These amounts were subsequently debited from HXD’s DBS bank account. HXD and LPQ maintain that they do not know who the recipient(s) of these cash cheques was, or what the moneys were used for. Instead, it appeared to HXD and LPQ that the cash cheques for the sums of $150,000 and $190,000 were credited into HXC’s bank account on the same day they were debited from HXD’s DBS bank account.
[68] In relation to the Agreement, HXD and LPQ aver that they are not bound by the Agreement as they were not even parties to the Agreement. The Agreement was entered into between the plaintiffs and LPG and/or HXC. LPQ and HXD had no knowledge of and were not aware of the Agreement.
[69] In response to the claim for dishonest assistance and/or knowing receipt, LPQ and HXD deny that these have been made out. Essentially, LPQ and HXD had no knowledge of the interactions and/or dealings between the plaintiffs and LPG and that LPG alone approached the plaintiffs to seek their funding investment for the 10JS Project. LPQ and HXD did not even know of the plaintiffs, had never met the plaintiffs and/or had never engaged in any form of communication whatsoever with the plaintiffs at all the material times.
[70] Lastly, LPQ and HXD deny conspiring with LPG and/or HXC to injure the plaintiffs and/or deprive them of their Investment Sum by unlawful means conspiracy.
Issues to be determined
[71] Based on the substantive claims of the plaintiffs, different heads of claims have been brought in relation to the defendants. For simplicity, the issues to be decided can be divided into eight heads of claim:
Claim under the Agreement
[72] I shall first deal with the nature of the Agreement between the plaintiffs and LPG and HXC. Was the Agreement for a loan or an investment?
Whether the Agreement was in substance for a loan or an investment
[73] Before addressing the various claims of the plaintiffs under the Agreement, there was a dispute, in the course of the trial, as to whether the Agreement was for a loan or an investment. In the original Statement of Claim dated 22 February 2022 (“SOC No. 1”) filed by the plaintiffs, the sum advanced by the plaintiffs under the Agreement was described as a loan, which is consistent with its description in the Agreement as a “loan”. However, the plaintiffs have since amended this description in their SOC No. 2, and defines the Agreement as an investment and refers to the sum advanced as an “Investment Sum”.
[74] Needless to say, a loan is significantly different from an investment in substance, meaning, implications, outcome, nature and terms. A loan is a transaction where one party lends a specific amount of money to another party with an agreement to repay the principal amount plus (as is usually the case) interest over a predetermined period: see Power Solar System Co Ltd (in liquidation) v Suntech Power Investment Pte Ltd [2018] SGHC 233 at [69]–[73]. An investment involves the injection of capital into a business with the hope of making a gain which is not guaranteed, unless otherwise provided for. An investor has a share in the business and may receive dividends if the business generates profits. However, if the business does badly, the investor may lose his investment sum. In a loan agreement the principal sum and interest are certain and predictable, while in an investment there are risks that the investor may forego his investment sum if the business turns south.
[75] During the trial, substantial time was spent on the cross-examination of Mdm Ding on whether the Agreement was for a loan or an investment. According to Mdm Ding, at the time of the Agreement, she had assumed the term “loan” to mean “investment”. As pointed out by counsel for LPQ and HXD, it seemed strange for Mdm Ding to now take the position that the Agreement was for an investment when all along in her earlier affidavit dated 26 April 2022 she had described the Agreement as for a “loan”. Mdm Ding conceded that she did not indicate in her earlier affidavit that the money advanced by the plaintiffs was an “investment”. This change in position was described by counsel for LPQ and HXD to be “inconsistent” and “contradictory”.
[76] In answering the question of whether the Agreement was for a loan or an investment, the first port of call must necessarily be the written terms of the Agreement. For ease of reference, I reproduce below the Agreement as exhibited in the Agreed Bundle of Documents with the parties’ identification numbers redacted.
[77] Two points may be distilled from the wording of the Agreement. First, the parties to the Agreement are expressly stated to be the plaintiffs (ie, Mr Peck and Mdm Ding) and HXC. Second, the term “loan” has been consistently used throughout the document. Based on a plain reading of the Agreement, it appears that the parties had entered into a loan agreement as opposed to an investment agreement. Could the term “loan” then be interpreted to mean an investment? It is helpful, at this juncture, to set out the approach to contractual interpretation that is applied by our courts.
[78] In applying the contextual approach to contractual interpretation, the court will first consider the plain language of the contract and the admissible extrinsic material that is objective evidence of its context: see Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] 3 SLR(R) 1029 (“Zurich”) at [130]. The Court of Appeal has summarised the principles in CIFG Special Assets Capital I Ltd (formerly known as Diamond Kendall Ltd) v Ong Puay Koon and others and another appeal [2018] 1 SLR 170 at [19]:
[79] While the plain language of the contract is undoubtedly the first port of call, there may be cases where the plain language of the contract leads to an absurd result based on the objective evidence available. This is a strong indication that the text is probably inconsistent with the relevant context: see Y.E.S. F&B Group Pte Ltd v Soup Restaurant Singapore Pte Ltd (formerly known as Soup Restaurant (Causeway Point) Pte Ltd) [2015] 5 SLR 1187 (“Soup Restaurant”) at [31]. The question then arises as to whether, having had regard to the relevant context, the intention of the parties and their subsequent conduct, the text on a re-examination is in fact as plain and unambiguous as it was originally thought to be. While there may be exceptional cases where the text is so clearly plain and unambiguous that the court is compelled to give effect to the meaning contained therein, notwithstanding that an absurd result would ensue, this would be an “extremely rare situation”, because the law should generally lead to a just and fair result (as opposed to an absurd one): see Soup Restaurant at [31].
[80] In light of the relevant principles above, I am satisfied that the usage of the term “loan” in the Agreement does not mean that the parties had intended for the transaction to be structured by way of a loan. Rather, the parties intended the Agreement to be for an investment in the 10JS Project. While at first glance the plain meaning of the term “loan” appears to be clear and unambiguous, adopting this interpretation would appear to be completely contrary to the intention of the parties and their conduct and expectations. First and foremost, adopting the plain reading of the term “loan” would lead to the strange result that HXC is loaning to itself the sum of $1.36m. Secondly, nowhere in the Agreement is an interest rate stipulated, which is odd had the parties intended the Agreement to operate as a loan. It was highly unlikely, based on the relationship between the plaintiffs and LPG up to that point, that the plaintiffs would have extended an interest-free loan to HXC. After all, the relationship between the plaintiffs and LPG was that of one between a client and a contractor. At that time, LPG had only been engaged by the plaintiffs to carry out the rebuilding of their house at Lucky Heights. There was nothing to indicate that the plaintiffs, LPG and HXC were in a relationship of such closeness as to justify a purported extension of an interest-free loan by the plaintiffs. I accept the evidence of Mdm Ding that LPG had specifically told them that he was prepared to share 20% of HXC’s $1.7m stake in the 10JS Project with the plaintiffs if they had paid a sum of $340,000.
[81] On the contrary, it appears that the usage of the term “loan” is not as clear and unambiguous as it would appear at first glance. Indeed, the fact that the Agreement sets out the “percentage of the Loan” as between the plaintiffs and HXC to be in the ratio of 20:80 supports the view that the Agreement ought to be interpreted as one of the plaintiffs purchasing 20% of HXC’s existing stake in the 10JS Project in exchange for the sum of $340,000. This would be in the nature of an investment since the plaintiffs would be acquiring an interest in HXC’s stake in the 10JS Project. Based on the final returns of the 10JS Project, the plaintiffs would thereby receive a 20% share in whatever profit (or loss) that accrue to HXC.
[82] I note that the plaintiffs may be right that the Defence filed by LPG and HXC is aligned with the plaintiffs’ case that the parties to the Agreement intended the sum of $340,000 to be an investment, and not a loan. As can be seen from the Defence of LPG and HXC, the following points were made which showed that LPG and HXC understood the Agreement to be an investment:
(a) “At that material time, the Plaintiffs had just sold their condominium and they had some spare cash which they were interested in investing.” [emphasis added]
(b) “The Plaintiffs then approached LPG to invest the sum of S$340,000.00 (“Investment Sum”) towards the amount which HXC had already invested into the [10JS Project] (i.e. S$1,700,000.00) with HXD in the manner as explained in paragraph 5.5 of this Defence above. …” [emphasis added]
(c) “As the Plaintiffs, LPG and HXC (the “parties”) did not know ultimately how much the [10JS Project] would be sold for, the parties then pegged the return for the said Investment Sum at 20% of the net profit of HXC’s share of the [10JS Project] …” [emphasis added].
[83] However, these are the parties’ subjective understanding of the meaning of the terms under the Agreement and may not be relevant to the objective approach to contractual interpretation.
[84] I note that Mdm Ding had, during the trial, pointed to a series of e-mails where the plaintiffs had corresponded with LPG on the basis that the Agreement was for an investment. I agree with Mdm Ding that these e-mails do show that the parties had communicated on the basis that the plaintiffs had invested in the 10JS Project. In an e-mail dated 11 May 2021, the plaintiffs had sent the following to HXC (addressed to LPG):
[86] By relying on the e-mails set out above, I note the plaintiffs are essentially attempting to admit the subsequent conduct of the parties in aid of their preferred interpretation. This raises the issue of whether subsequent conduct is admissible for the purpose of interpreting a contract. As stated by the Court of Appeal in Simpson Marine (SEA) Pte Ltd v Jiacipto Jiaravanon [2019] 1 SLR 696 (“Simpson Marine”) at [78], the admissibility and relevance of subsequent conduct in the interpretation of contracts has yet to receive detailed scrutiny by the Court of Appeal. This was notwithstanding the court’s earlier tentative views in Zurich at [132(d)] in that while there is no absolute prohibition against evidence of subsequent conduct in interpreting a contract, the courts should be circumspect in the consideration of subsequent conduct where such evidence does not “elucidate the parties’ objective intentions or relate to a clear and obvious context”: see Simpson Marine at [78]. It seems that these e-mails do appear to confirm the plaintiffs’ case that the Agreement had been structured as an investment. These e-mails satisfy the requirements of being relevant, reasonably available to the parties, and relate to a clear and obvious context of the returns promised by LPG to the plaintiffs.
[87] I am satisfied that the following interpretation of the Agreement best gives effect to the objective intention of the parties: HXC was to sell 20% of its stake in the 10JS Project to the plaintiffs in exchange for the latter’s payment of a sum of $340,000. This is in effect an investment by the plaintiffs in the 10JS Project which has the effect of the plaintiffs sharing in 20% of any profit or loss from HXC’s share of the returns in the 10JS Project. I would add that this interpretation accords with Mdm Ding’s evidence in court that she had not given much thought to the distinction between a loan and an investment at the time of signing the Agreement and that she had all along proceeded on the assumption that the term “loan” referred to an investment. On this basis, I am cognisant that the Agreement was not drafted by or with the aid of legally trained persons. The scrutiny of the parties’ usage of the term “loan” should not be subject to legalese interpretation. Indeed, this approach is supported by the following statements of principle by Goh Yihan JC (as he then was) in Compass Consulting Pte Ltd v Lim Siau Hing (alias Lim Kim Hoe) and another [2023] SGHC 17 at [34] regarding the approach to be taken in interpreting contracts drafted by laypersons:
[88] For the above reasons, I am of the view that this is not an “extremely rare situation”, to borrow the words of the Court of Appeal in Soup Restaurant, where the text is so clearly plain and unambiguous that the court is compelled to give effect to the meaning contained therein, notwithstanding that an absurd result would ensue.
[89] For completeness, I wish to add that I am conscious that the way the term “loan” had been used in the Agreement is strikingly similar to the director’s resolutions of HXD dated 23 July 2018 in respect of the investment in the projects comprising the 10JS Project (ie, the 2018 HXD Resolution) and the Fidelio Street project (the “FS Project”) by the shareholders of HXD and LPQ. Due to this similarity, it is likely, as the plaintiffs contend, that these resolutions have been used as a template in the drafting of the Agreement. In these resolutions, notwithstanding the fact that the respective financial contributions of the shareholders of HXD and LPQ had been described as a “loan”, LPQ and Mr Yam have said that it was the understanding of the shareholders in HXD that the term “loan” is to be interpreted as an investment; the shareholders accepted that they would share in any profit or bear the loss from the sale of these projects. The plaintiffs also said LPG had shown the plaintiffs a copy of the 2018 HXD Resolution setting out the respective financial contributions of the investors in the 10JS Project.
Whether the plaintiffs are contractually entitled to receive a minimum of 20% returns from HXC
[90] Next, the plaintiffs have claimed against the defendants for the payment of the sum of $408,000, which comprises the Investment Sum of $340,000 plus an additional 20% returns of $68,000. Therefore, the question of whether there is any basis for this claim arises for my consideration. The express terms of the Agreement are straightforward: the plaintiffs and HXC are stated expressly to be the contractual parties. Accordingly, the plaintiffs should look towards HXC, and not LPQ or HXD, for their contractual claim under the Agreement. The issue, therefore, is whether the plaintiffs can succeed in their claim for the sum of $408,000, being the Investment Sum and the additional “promised profits of minimally at least 20%”, ie, $68,000 against HXC. Indeed, the plaintiffs’ SOC No. 2 under the heading titled “CLAIM AGAINST HXC FOR BREACH OF THE AGREEMENT” shows that they are pleading for the 20% returns of $68,000 as against HXC specifically.
[91] On this issue, it appears that the parties did not intend for the written terms of the Agreement to reflect all the terms of the contract between the plaintiffs and HXC. The evidence shows that the Agreement was hastily prepared by a layperson who was a staff of LPG in around five minutes and appears to be a barebone one-page document. The Agreement merely reflects the Investment Sum to be paid, and that the investment related to 20% of HXC’s $1.7m stake in the 10JS Project (see above at [76]). It is apparent from the face of the Agreement that the terms one would typically find in an investment agreement are absent. For example, there are no provisions regarding when or to whom payment of the Investment Sum was to be made. It is the evidence of the plaintiffs that LPG had verbally told them to make payment to HXD, a provision not stated on the face of the Agreement. Accordingly, the contract between the plaintiffs and HXC appears not to be one that is fully captured within a written agreement. Rather, it is one that is partly oral and partly written.
[92] The question then is whether there was an oral agreement between the plaintiffs and HXC that the plaintiffs would be guaranteed a 20% returns on the Investment Sum. The burden of proving this agreement lies squarely on the plaintiffs. This is provided for under s 105 of the Evidence Act 1893 (2020 Rev Ed), which states that the “burden of proof as to any particular fact lies on that person who wishes the court to believe in its existence …”.
[93] As stated in Thong Soon Seng v Magnus Energy Group Ltd [2023] SGHC 5 at [16], “[i]n a civil action, it is in the pleadings that each party sets out, whether by way of claim or defence, the facts which it wants the court to believe to be true”. Accordingly, it is necessary to review the pleadings to discern what exactly have been pleaded by the plaintiffs and for which it is necessary for them to prove. I note that the plaintiffs’ SOC No. 2 curiously describes the 20% returns as an “interest” under the Agreement. There, the plaintiffs state that they are “seek[ing] payment of the principal plus interest under the Agreement (i.e. $340,000 plus 20% ie $68,000).” The description of the 20% returns as “interest” on the Agreement could perhaps be explained by the manner in which the plaintiffs had pleaded the Agreement in the previous version of their SOC No. 1 where they had proceeded on the basis that the Agreement was made in the nature of a loan (with the interest rate pegged at 20%) rather than an investment. Notwithstanding the ambiguity within the plaintiffs’ pleadings, I am prepared to read the plaintiffs’ pleadings charitably to mean that there had been an oral agreement formed between the plaintiffs and LPG for a 20% returns of the Investment Sum upon the maturity of the investment under the Agreement.
[94] I am satisfied that the plaintiffs have proven that it was more likely than not that there was an oral agreement between the plaintiffs and LPG that the 10JS Project would minimally yield a 20% profit for the plaintiffs. According to the plaintiffs, they recall LPG telling them that the 10JS Project would minimally yield a 20% profit when the 10JS Project was sold after redevelopment. Furthermore, the plaintiffs would be paid upon obtaining the TOP of the 10JS Project. As LPG was not called as a witness in these proceedings, the only evidence shedding light on the discussions between the plaintiffs and LPG is the one-sided and potentially self-serving evidence from the plaintiffs. Nonetheless, I am prepared to accept that this was, in fact, communicated by LPG and that this had been the subject of an oral agreement between the plaintiffs and HXC.
[95] Subsequent e-mails exchanged between LPG and the plaintiffs support my finding that there had been an oral agreement for the plaintiffs to receive at least 20% returns on their Investment Sum. This is essentially an issue concerning the admissibility of subsequent conduct for the purposes of determining the formation of a contract. According to Chitty on Contracts (Hugh Beale gen ed) (Sweet & Maxwell, 33rd Ed, 2019) at para 13-136, subsequent conduct may be admissible in the determination of whether a contract has been formed and its terms. However, I note in this regard that the permissibility of admitting subsequent conduct for the purposes of ascertaining the formation of a contract is unsettled in Singapore. The Court of Appeal in Simpson Marine had observed at [78] that “where the court is ascertaining whether a contract has been formed, evidence of subsequent conduct has traditionally been regarded as admissible and relevant, although there is some instability in this rule” [emphasis in original]. However, the court there also noted that “[t]he admissibility and relevance of subsequent conduct in the formation and interpretation of contracts has yet to receive detailed scrutiny by this court.” In the decision of the Court of Appeal in The “Luna” and another appeal [2021] 2 SLR 1054 (“Luna”) at [34], the court appears to have aligned itself in favour of the admissibility of subsequent conduct to aid in the ascertainment of the formation of a contract. The court stated that the distinction in approach to the consideration of subsequent conduct between cases involving the interpretation of contracts and cases involving the formation of contracts is “justified on the basis of principle and authority”. In making this observation, the court cited its earlier observations in Simpson Marine at [78] that evidence of subsequent conduct has traditionally been regarded as admissible and relevant where the court is ascertaining whether a contract has been formed.
[96] I am satisfied that the e-mail dated 11 May 2021 which the plaintiffs had sent to HXC seeking the payment of the “promised return interests 20-25%” [emphasis added] is confirmation of an agreement having been reached for the minimal payment of a 20% returns. I note that LPG, in his reply dated 16 September 2021, did not dispute the plaintiffs’ assertion that a promise had indeed been made for a minimum 20% returns. Instead, LPG appeared to have accepted that this was in fact the promised returns when he stated that “the amount will be paid by end of December 2021”. This is supported by the evidence of Selvaraj Narendran (“Mr Narendran”), who was employed as a junior quantity surveyor in HXC. According to him, after receiving a chaser from the plaintiffs for payment on 27 December 2021, LPG had told Mr Narendran to ignore the plaintiffs’ e-mail as the 10JS Project had yet to obtain TOP so the proceeds of sales could not be distributed and that the plaintiffs’ request for payment was premature. What is material is that LPG did not deny that HXC owed the plaintiffs the claimed sums.
[97] For the reasons above, I find that the Agreement is structured in the manner of an investment. Furthermore, the Agreement does not capture the full terms of the contract between the plaintiffs and HXC such that the contract between the plaintiffs and HXC is partly oral and partly written. On this basis, I find that the plaintiffs are entitled under an oral agreement for 20% returns on the Investment Sum paid by the plaintiffs.
Claims for fraudulent misrepresentation
[98] The plaintiffs allege that LPG had made a series of fraudulent misrepresentations to the plaintiffs to induce them to enter into the Agreement to invest in the 10JS Project. Before turning to the specific misrepresentations alleged to have been made, I shall set out the relevant legal principles to establish a claim for fraudulent misrepresentation.
[99] The elements to ground a claim for fraudulent misrepresentation were set out in Panatron Pte Ltd and another v Lee Cheow Lee and another [2001] 2 SLR(R) 435 (“Panatron”) at [14]. The plaintiffs must show that:
[100] The plaintiffs submit that LPG made his representations fraudulently, and either knowing that they were false and untrue, or recklessly not caring whether they were true or false with a view to induce the plaintiffs to transfer the Investment Sum to HXD. The plaintiffs aver that LPG’s intention in inducing the plaintiffs to enter into the Agreement was to obtain the Investment Sum and utilise it for purposes other than for the 10JS Project.
[101] The plaintiffs rely on a long list of misrepresentations which they allege had been communicated by LPG. These are as follows:
Whether the misrepresentations were in fact made by LPG
[102] The only evidence that the alleged misrepresentations were made came from the testimonies of the plaintiffs. I am mindful of the high evidential standard that is applicable to any claim for fraud. The standard of proof for deceit is that of the civil standard, but the fact of fraud is not easily established. As recognised by the Court of Appeal 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 [30]–[31], the allegation of fraud is a serious one and generally speaking, the graver the allegation, the more the party, on whose shoulders the burden of proof falls, may have to do if he hopes to establish his case. There is corroborative evidence in relation to some of the representations, namely those found in [101(g)], [101(h)] and [101(j)], as there is supporting documentary evidence such as the Agreement recording HXC’s contribution of $1.7m. There is also subsequent correspondence between the the plaintiffs and LPG showing that payment would be made upon obtaining TOP and that the promised returns ranged from 20 to 25%, which implies that these representations had been made. Thus, there is sufficient evidence to suggest that the representations were made to the plaintiffs by LPG.
[103] Some of the representations, for instance in [101(a)] and [101(g)], do not amount to actionable misrepresentations as they are true events. The 10JS Project was in fact owned by HXD in so far as HXD had been incorporated as an investment holding company for the 10JS Project. It is also true that HXC had invested $1.7m for a stake in the 10JS Project with other investors as can be seen from the 2018 HXD Resolution.
[104] The representations in [101(f)], [101(i)], [101(h)] and [101(j)] are also not actionable misrepresentations for the following reasons:
(a) The representation in [101(f)] is a statement of opinion and it also contains true facts made by LPG that HXC could benefit from the FS Project and the 10JS Project by undertaking the construction works as the main contractor and taking a share in these projects.
(b) As for the representation in [101(i)], this is, at best, a statement of intention by LPG that he would utilise the money solely and exclusively for the 10JS Project. Statements of fact must be distinguished from statements as to future intention, predictions, statements of opinion or belief, sales puffs, exaggerations and statements of law, all of which do not give rise to actionable misrepresentation: see Kong Chee Chui and others v Soh Ghee Hong [2014] SGHC 8 at [4]. Based on the evidence adduced, there is simply nothing to suggest that LPG did not hold this belief at the time when the representations were purportedly made. Moreover, the plaintiffs are unable to adduce evidence directly or indirectly that the Investment Sum was used for purposes other than for the 10JS Project.
(c) It is axiomatic that to establish an actionable misrepresentation, there must be a false statement of existing or past fact made by the representor: see Lim Koon Park and another v Yap Jin Meng Bryan and another [2013] 4 SLR 150 at [38]. The representations in [101(h)] and [101(j)] are not statements of a present or past fact. Rather, they are an assessment of future events regarding the plaintiffs’ Investment Sum being given a minimal 20% returns and that the plaintiffs would receive payment when the 10JS Project obtains its TOP, which LPG predicted would occur in two years.
[105] The contentious representations are those in [101(b)], [101(c)], [101(d)] and [101(e)]. In assessing whether these representations were false, the key issue is: was LPG in control of both HXC and HXD at the material time when the plaintiffs had entered into the Agreement? The plaintiffs allege that LPG’s control over the operations of HXC and HXD was a “significant factor” that the plaintiffs considered when deciding to invest in the 10JS Project. Was LPG actually in control of HXC and HXD on 18 August 2018 when the plaintiffs signed the Agreement? I pause to mention that the determination of this issue will be relevant for the analysis in relation to the plaintiffs’ other substantive claims such as dishonest assistance or knowing receipt.
Whether LPG was in control of HXC
LPQ’s assumption of sole directorship in HXC
[106] In respect of the question of whether LPG was in control of HXC, I find that this was more likely the case than not. It appears that on 18 August 2018, the sole director in HXC was LPQ (see Annex 1). At that time, LPG was the largest shareholder in HXC with 250,000 shares. The other shareholders of HXC were LPQ and Luo Hai Xia (LPG’s wife), who each held 200,000 shares. Thus, LPG and his wife held 450,000 shares out of HXC’s total 650,000 issued shares, representing almost a 70% shareholding in HXC. Moreover, based on the evidence of LPQ, it appears that LPG was the de facto controller of HXC. In particular, LPQ testified that after joining HXC in August 2017, he had been told by LPG that LPG would make LPQ a director and shareholder of HXC. LPQ had in fact been made a shareholder of HXC holding 200,000 shares on 1 August 2017 and thereafter was made the sole director on 4 August 2017. LPQ did not pay for his shares in HXC. It is material to note that immediately prior to LPQ’s assumption of his directorship and shareholding, LPG had been the sole director of HXC. The conclusion to be drawn from this is that at least up to the point that LPQ had assumed both his directorship and shareholding, LPG was in control of HXC. As can be seen from the director’s resolution dated 4 August 2017, it was by the authority of LPG as director that LPQ was appointed a director of HXC and given shares in HXC.
LPG’s continued control of HXC after LPQ’s assumption of sole directorship
[107] The issue is whether LPG had continued to retain his control over HXC right up to 18 August 2018 when the Agreement was made, notwithstanding that LPQ had since been made HXC’s sole director (as of 4 August 2017) and a shareholder (as of 1 August 2017). The evidence shows that LPG was still in control of HXC and continued to make all decisions relating to HXC. For example, the Agreement had been purportedly made on behalf of HXC by LPG on 18 August 2018. In fact, LPG had held himself out as the “director” of HXC when he signed the Agreement with the plaintiffs. This was notwithstanding the fact that LPQ was actually the only director of HXC at that time. According to LPQ, he had no knowledge of the existence of the Agreement. Similarly, the plaintiffs accept that LPQ had never dealt with the plaintiffs prior to the commencement of the present suit, as observed from Mdm Ding’s response during cross-examination:
[108] The only time when the plaintiffs had a brief encounter with LPQ was at a worksite located along Frankel Drive when one of the workers on-site was injured. Even then, according to Mdm Ding, the plaintiffs did not have the opportunity to speak to LPQ as he was busy conveying the injured worker to the hospital.
[109] Furthermore, I note that despite being the sole director of HXC, LPQ was never a bank signatory of HXC’s bank accounts nor granted access to HXC’s bank accounts. This is corroborated by Mr Narendran who stated that LPG controlled and managed the finances of HXC and was its sole signatory. Mr Narendran’s testimony in this regard is particularly probative as he said he wrote cheques to suppliers and sub-contractors of HXC for LPG to sign. Clearly, LPG was in control of HXC’s bank accounts. After LPQ had handed over two cash cheques totalling a sum of $340,000 (comprising the sums of $150,000 and $190,000) to LPG, these same cash cheques were banked directly into HXC’s bank account on 25 and 28 August 2018, respectively.
[110] Lastly, there is no evidence to show that LPQ had made any decisions in respect of HXC despite his status as the sole director of HXC. According to LPQ, notwithstanding the fact that he had been made the sole director of HXC between 4 August 2017 and 11 October 2019, LPG retained the ability to “do what he liked in the name of HXC”. The conclusion to be drawn therefore was that LPG remained in control of HXC. According to LPQ, he did not know that LPG had even resigned as a director of HXC and that LPQ had become the sole director of HXC. He realised this only much later in early October 2019. LPQ testified that this arrangement, ie, for him to assume the sole directorship of HXC, was not what LPG and he had agreed to. Instead, LPQ had agreed to be employed by HXC to assist LPG in supervising HXC’s workers.
[111] From the foregoing analysis, I am satisfied that LPG was in control of HXC and that there was no misrepresentation on this basis.
LPG is the alter ego of HXC
[112] The plaintiffs’ pleaded case is that LPG is the alter ego of HXC. I set out the relevant principles on the piercing of the corporate veil on the ground that a defendant is the alter ego of a company. In Alwie Handoyo v Tjong Very Sumito and another and another appeal [2013] 4 SLR 308 (“Alwie”) at [96], the Court of Appeal stated that the key question is “whether the company is carrying on the business of its controller”. Alwie was an appeal from the High Court decision of Tjong Very Sumito and others v Chan Sing En and others [2012] 3 SLR 953. In that case, the fifth defendant, Alwie, had absolute control of OAFL, the party to the agreement with the plaintiff. Alwie asserted that he was entitled to the money payable under the agreement, transferred money payable to OAFL to himself, treated OAFL’s bank account (into which other money was paid by the plaintiff) as his personal account, and spoke entirely for OAFL in the proceedings. The trial judge considered that Alwie had used OAFL as an extension of himself. On appeal, this conclusion was upheld by the Court of Appeal. In the Court of Appeal’s view, Alwie “made no distinction between himself and OAFL” in relation to the agreement with the plaintiff: see Alwie at [99]–[100]. Returning to this case, at the material time of the plaintiffs’ Agreement (ie, 18 August 2018), LPG’s conduct in relation to HXC parallels that of Alwie in relation to OAFL in Alwie. LPG appeared to make no distinction between himself and HXC in his dealings with external parties. Notwithstanding that LPQ was the sole director of HXC at the material time, the only role that LPQ played in HXC was to help LPG supervise the workers of HXC. In contrast, LPG, at all times, was in control of HXC, a point corroborated by Mr Narendran, an employee of HXC. For example, he appears to have been in control of HXC’s bank accounts (see above at [109]). Hence, I find that LPG is also the alter ego of HXC. This being the case, references to LPG henceforth should also be taken to refer to HXC. Thus, there is no misrepresentation by LPG that he was in control of HXC.
Whether LPG was in control of HXD
[113] One of the main thrusts of the plaintiffs’ claim in misrepresentation appears to be that the representation by LPG that he was in control of HXD is a false statement of fact. In other words, the plaintiffs are alleging that LPG was not in control of HXD, at least for the purposes of their misrepresentation claim.
[114] I pause here to note that this position appears to be at odds with the plaintiffs’ allegation in relation to the other substantive claims (eg, the claim in breach of trust) where the plaintiffs take the contrary position that LPG was in control of HXD for purposes of pinning liability on HXD for the actions of LPG. In any case, it is apparent that the answer to the question of whether LPG is in control of HXD, as a matter of fact, will be critical in relation to not just the plaintiffs’ claim in misrepresentation but also their other claims in trust.
The plaintiffs’ allegations in support of LPG’s control over HXD
[115] In support of the claim that LPG was in control of HXD, the plaintiffs rely on a broad swath of points which include the following:
(a) The OTP for the Original 10JS dated 19 September 2017 was granted to “[LPG] and/or his nominees”, before HXD was even incorporated. LPQ then exercised it on behalf of HXD as LPG’s nominee on 16 November 2017.
(b) LPG was the signatory of many high-value transactions of HXD. In particular, he was the one who signed the Transfer Instrument that transferred the Original 10JS from the previous owner to HXD.
(c) In multiple correspondence between the Urban Redevelopment Authority (the “URA”) and Context Architects Pte Ltd, in which the former updated the latter on the status of the Original 10JS’s planning permission, LPG was named as the developer of the 10JS Project. LPG was also frequently copied in such correspondence. These include:
(d) A document accounting for payments made by HXD on behalf of HXC to HXC’s sub-contractors and suppliers for the 10JS Project and the FS Project shows LPG’s liberal use of HXD’s funds to make payments to HXC’s sub-contractors and suppliers. This was done despite the existence of directors’ resolutions which expressly provide for how HXC’s costs of redeveloping the properties are to be accounted for by HXD. These resolutions provided for the construction costs incurred in the 10JS Project and the FS Project to be treated as HXC’s loan to HXD.
(e) LPG was also the one who signed, on behalf of HXD, the OTPs for HXD’s sale of 10 JS, 10A JS and FS.
(f) LPQ and/or HXD’s directors also deferred to LPG’s decisions in respect of the sale of FS, 10 JS and 10A JS. In relation to FS, LPG was allowed to acquire the property on behalf of HXD without passing any resolution. In relation to the sale of the redeveloped 10JS properties, despite the fact that LPG conducted the sale of those properties in mid-2019, a director’s resolution was only signed on 3 May 2021 (about two years later) to ratify the sale of the redeveloped 10JS properties . The plaintiffs submit that this plainly shows that LPG had the authority and power to act as he liked with regard to the affairs of HXD.
(g) The audio messages exchanged between LPQ and LPG over WhatsApp on 7 January 2022 (the “WhatsApp Conversation”) show LPG giving instructions to LPQ on how LPQ and HXD should respond to the claims made against them by Mr Ang in Suit 8.
(h) Based on the People’s Action Party (“PAP”) Jurong Group Representation Constituency (“GRC”) Meet-the-People Session’s letter dated 17 December 2020, it can be seen that LPG had held himself out as the “Managing Director” of HXC and HXD when seeking the assistance of Mr Shawn Huang (“Mr Huang”), the Member of Parliament for Jurong GRC. This letter was written by the staff of Mr Huang to request the Immigration & Checkpoints Authority, on LPG’s behalf, to reassess the visa application of one Wang Shuming to permit her entry into Singapore to guide and to manage the installation works in respect of a construction project at Jalan Sampurna, a project undertaken by HXC at that point in time.
(i) LPG was granted full access to HXD’s available funds, as can be seen from a series of transactions in which HXD had allowed LPG to receive and/or retain a total sum of $1.137m.
(j) The acceptance of LPG’s request to be the company secretary of HXD by LPQ and the nine shareholders of HXD.
(k) LPQ’s signing of the Letter of Acceptance dated 25 July 2018 to accept HXC’s quotation dated 25 July 2018 for the construction costs of $1.7m without understanding or paying heed to the documents that were given to him to sign. In doing so, LPQ simply acted in accordance with LPG’s instructions.
(l) LPQ’s signing of the Confirmation Letter addressed to HXC dated 15 March 2021 which stated, among other things, that HXC’s “loan amount” of $1.7m for the 10JS Project with profit would be paid to HXC’s OCBC bank account within three days of receipt of sales payment. It appears that LPQ had raised no queries as to why such a letter needed to be signed at that point in time.
[116] Having considered the above points, I am not satisfied that LPG was, on a balance of probabilities, in control of HXD. The implication of this finding is that LPG is liable for misrepresentation in so far as he had represented to the plaintiffs that he was in control of both HXC and HXD, when LPG was actually only in control of HXC and not HXD. I set out my reasons below.
(1) LPG’s purported authority to make important transactions on behalf of HXD
[118] However, this did not mean that LPQ had left all matters in the hands of LPG. The final say in respect of decisions was at all times within the collective purview of the shareholders of HXD and LPQ, not LPG. It is also the evidence of Mr Yam that the shareholders of HXD and LPQ had only agreed to appoint LPG as the company secretary to deal with administrative affairs and paperwork. LPG was also required to inform the shareholders of HXD and LPQ what documents he had signed. In my view, this is highly probative as to the level of control possessed by LPG. Indeed, LPQ’s evidence that HXD was managed by the shareholders of HXD and LPQ collectively, and the point that LPG was not in control of HXD is corroborated by Mr Yam. This is also supported by the fact that HXD had maintained its own separate bank account, and the signatories of the bank account were LPQ and three other directors of HXD. The fact that control was vested in the shareholders of HXD and LPQ, and not LPG, is consistent with Mr Yam’s testimony that after all, it was the investments of the shareholders of HXD and LPQ which were at stake. They were the ones who had invested large sums of money into HXD to purchase the Original 10JS and to undertake the 10JS Project.
[119] As for how the OTP for the Original 10JS had come to be issued in the name of LPG and/or his nominees, it was LPG who had obtained the OTP before he had even approached LPQ and the other shareholders of HXD regarding the investment opportunity that is the 10JS Project. The totality of the evidence does point to the conclusion that the incorporation of HXD – as the corporate vehicle through which the 10JS Project was to be undertaken – was the brainchild of LPG. Even on the plaintiffs’ own case, they do not dispute that the idea of setting up HXD and getting investors to fund the redevelopment projects by HXD was LPG’s idea. In fact, it was LPG’s proposal for LPQ and the other shareholders of HXD, such as Mr Yam, to set up a company to purchase the Original 10JS for redevelopment. According to Mr Yam, he thought that this was a good idea because the investors’ interests would be protected as the property would be owned and held by HXD. Should anything happen to LPG and/or HXC, their investment would be protected as the property (ie the Original 10JS) would still be owned by HXD. Furthermore, I note in passing that the fact that the 10JS Project was the brainchild of LPG is consistent with the minor point that HXD, in a similar fashion to HXC, was named after LPG’s wife, Luo Hai Xia. LPQ’s evidence is that LPG’s proposal to incorporate HXD for the purposes of undertaking the 10JS Project was discussed among the shareholders of HXD and LPQ and that it was ultimately their decision to adopt LPG’s proposal. This was also the evidence given by Mr Yam. Most importantly, this understanding continued throughout LPG’s dealings with LPQ and HXD, with LPG being left to deal with the execution of the collective decisions of HXD’s shareholders and LPQ.

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Peck Wee Boon Patrick and another v Lim Poh Goon and others

Laws this judgment relies on

Grounds of decision

Introduction

Background to the dispute

The parties and companies involved

Involvement of LPQ

The purchase of the Original 10JS and the incorporation of HXD

How the plaintiffs became involved

The meeting on 18 August 2018 and the Agreement

The deposit and withdrawal of the plaintiffs’ contribution

Change in the directorship of HXC

Progress of the 10JS Project

Change in the directorship of HXD

The plaintiffs’ efforts seeking repayment

The parties’ cases

The plaintiffs’ case

Claim against HXC and/or LPG under the Agreement

Claim in fraudulent misrepresentation

Claim in constructive and Quistclose trusts

Claims in dishonest assistance and knowing receipt

Claim in unjust enrichment

Claim in conspiracy

LPG’s and HXC’s case

LPQ’s and HXD’s case

Issues to be determined

Claim under the Agreement

Whether the Agreement was in substance for a loan or an investment

Whether the plaintiffs are contractually entitled to receive a minimum of 20% returns from HXC

Claims for fraudulent misrepresentation

Whether the misrepresentations were in fact made by LPG

Whether LPG was in control of HXC

LPQ’s assumption of sole directorship in HXC

LPG’s continued control of HXC after LPQ’s assumption of sole directorship

LPG is the alter ego of HXC

Whether LPG was in control of HXD

The plaintiffs’ allegations in support of LPG’s control over HXD

(1) LPG’s purported authority to make important transactions on behalf of HXD