Ng Chee Weng v Lim Jit Ming Bryan and another

Kan Ting Chiu J:

[1] The plaintiff Ng Chee Weng applied to amend his Statement of Claim against the defendants. Some of the amendments were dismissed by an Assistant Registrar (“AR”), and the plaintiff appealed against the dismissal. I affirmed the AR’s decision and set out my grounds.

[2] On 26 May 2009, when the plaintiff commenced the action against the defendants, he set out the basis of his claim in para 1 of the Statement of Claim:

[3] The Statement of Claim went on to state that the plaintiff had sold his shares in the company to the first defendant:

[4] The plaintiff’s complaint was that the first defendant had not accounted for and paid over to him dividend payments the company paid in respect to his shares prior to the sale. He alleged that:

[5] The plaintiff concluded the Statement of Claim with a claim for the dividends of $8,880,916.67.

[6] Besides his entitlement to the dividends, the Statement of Claim also alluded to discussions between the plaintiff and the first defendant. References were made to them in several parts of the Statement of Claim, mainly in:

Although the plaintiff referred to the discussions, he stopped short of alleging that there was a concluded agreement.

[7] The defendants applied to strike out parts of the Statement of Claim including the parts quoted in the foregoing paragraph on the ground that they referred to “without prejudice” communications, which were privileged from disclosure. The plaintiff resisted the application and contended that the negotiations were not carried out on a “without prejudice” basis.

[8] The application came on for hearing before Justice Belinda Ang Saw Ean, who granted the application and struck out the paragraphs in question. The plaintiff was not satisfied with her decision and brought an appeal to the Court of Appeal.

[9] In the course of the arguments before the Court of Appeal, the plaintiff put forward amendments to the Statement of Claim to plead a claim to enforce a settlement agreement as an alternative claim to the claim for the dividends. (I refer to these amendments, which were not incorporated into any application for amendment, as the proposed amendments.) The essence of the amendments is in [33] of the proposal:

The critical change was that the settlement negotiations became an agreement to settle at $4.5m.

[10] The defendants objected to the proposed amendments on the ground that if they were allowed, the plaintiff’s case would be that there was a concluded settlement agreement, and the plaintiff cannot have a claim for the dividends anymore. The argument found favour with the Court, which disapproved the proposed amendments and dismissed the plaintiff’s appeal.

[11] However, the Court of Appeal went on to issue an Addendum to its order that:

[12] The plaintiff took heed of the Addendum and applied in Summons No. 3969 of 2010 (“SUM 3969/2010”) to amend the Statement of Claim. The main amendments (I refer to the amendments in the application as the draft amendments) are:

and:

[13] These amendments were disallowed by the AR. In the appeal, the plaintiff submitted that:

[14] The defendants’ response was:

[15] The requirement for election the defendants referred to was an election between inconsistent rights. This was explained by Stephen J in Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 641:

and this exposition of the doctrine was adopted by the Court of Appeal in Ang Sin Hock v Khoo Eng Lim [2010] 3 SLR 179 at [30].

[16] In the present case the right to the dividends and the right to the settlement sum are not concurrent rights because the right to the dividends existed before the right to the settlement sum, and was extinguished by it.

[17] The plaintiff’s submission that he was not seeking to run two mutually inconsistent cases called for scrutiny. Two claims were pleaded, the first for the dividends, which he claimed in trust on the basis that he was the beneficial owner of the dividends and the first defendant was holding them as his trustee, and the second under contract, on the basis that the plaintiff and the first defendant had agreed to settle his claim for the claim for dividends.

[18] These two claims are mutually exclusive. If there was a settlement agreement, it extinguished the dividends claim. If the defendants did not honour the agreement, the plaintiff can sue on the agreement or repudiate it. If he sues on the agreement, he cannot pursue the dividends claim. If he repudiates the agreement, he cannot claim for the settlement sum.

[19] The defendants argued that when the plaintiff asserted that he is entitled to the $4.5m under the settlement agreement, he could not retain his claim to the dividends. The defendants’ argument was that the plaintiff had elected at the time he filed his Statement of Claim. That is not really correct because at that stage, the question of the election did not arise since the plaintiff was only asserting one right, the claim in trust for the dividends, and he was not asserting that there was a settlement agreement.

[20] By the proposed amendments and the draft amendments, the plaintiff changed his position and complicated matters. When he presented the proposed amendments to the Court of Appeal, he put forward two causes of action – one in contract and one in trust, and when he filed SUM 3969/2010, he was also pleading the same causes of action albeit in the reversed order.

[21] Professor Tan Cheng Han SC, counsel for the plaintiff, argued that this did not call for election, that the plaintiff is entitled to plead in the alternative, with the claim for the $4.5m as the main claim and to fall back on the dividends claim if it is found at trial that there was no settlement agreement. That explanation did not remove the need to elect if he was allowed to plead in the alternative in the manner set out in the application. When the plaintiff takes the position that he has a claim in contract and another claim in trust, he is putting forward two claims. Despite his apprehension that the claim on the settlement agreement may fail, he was making the claim. Election arises out of the multiplicity of inconsistent claims, not the strength of the claims.

[22] The plaintiff had to confront a basic issue, whether he was entitled to plead in the alternative as set out in his application. Holding the plaintiff to his case, he had compromised the dividends claim by the time he commenced this action. There was one surviving claim, the claim under the settlement agreement. He cannot be allowed to maintain the dividends claim when his case was that the claim had been compromised. It is not a question of election because election implies that the elector has two proper claims between which he must choose, and there was only one claim.

[23] On this ground alone, the plaintiff’s appeal fails. However, there is another issue with the draft amendments. Even if it is assumed that the form of the draft amendments is acceptable, the draft amendments still have to conform to the rules on pleadings.

[24] The circumstances in which the plaintiff presents the draft amendments on the $4.5m settlement agreement must be remembered. The $4.5m figure had been mentioned in the plaintiff’s pleadings and affidavits from the commencement of the action. Unfortunately, the plaintiff has been of two minds over whether it was an offer or a settlement agreement. In para 30(3) of the Statement of Claim, the plaintiff alleged that on 31 March 2001, the first defendant offered him $4.5m, and he decided to accept it. In para 30(4), the plaintiff alleged that on 15 April 2009, he informed the first defendant that he decided to reject the $4.5m offer, and made a counter-proposal of $6.5m, which the first defendant rejected. It was on that basis that the plaintiff claimed for the dividends. The plaintiff explained in his affidavit filed on 26 May 2009 in support of the claim that:

But in an affidavit he deposed more than a year later on 23 August 2010 to support the draft amendments in SUM 3969/2010, he maintained that:

without acknowledging or explaining the fundamental difference between a $4.5m offer and a $4.5m settlement agreement.

[25] The defendants had drawn attention to the contradictions in the plaintiff’s case. The first defendant affirmed an affidavit on 30 August 2010 where he reiterated in [26] thereof that there was no concluded settlement agreement. In support of his contention he exhibited an e-mail from the plaintiff to him and one Terence Ng dated 21 April 2009 in which he stated:

This e-mail squarely contradicted the assertion in the draft amendments that a settlement agreement was made on 31 March 2009.

[26] The plaintiff had responded to the first defendant’s affidavit. He filed an affidavit on 31 August 2010 and stated at [13]:

without saying anything about his e-mail of 21 April 2009. In the circumstances, he is deemed to admit that he had sent the e-mail.

[27] The last word on the settlement from the plaintiff was in his written submissions dated 15 October 2010 where it was stated at para 12(h) that:

again without reference to the e-mail of 21 April 2009.

[28] When all the plaintiff’s narrations were examined, it is clear that he has no consistent position on this issue. In fact, he had taken opposite positions on it at different times with equal conviction. Quite obviously, his recollection of the events cannot be relied on. Beyond his recollection, however, there is one document which recorded his position on the issue – the e-mail of 21 April 2009 which he had not disputed, explained or retracted.

[29] Counsel for the plaintiff had explained that the draft amendments were presented after the proposed amendments were rejected by the Court of Appeal. The draft amendments reversed the order of the claims in response to the Court of Appeal’s rejection.

[30] The draft amendments may have dealt with that difficulty, but they faced other objections. When the Court of Appeal kept the door open for further amendments, it made clear that any other amendments must be in accordance to general rules or pleadings.

[31] The plaintiff equivocated over the negotiations and the settlement since the commencement of the action in May 2009. The positions he had taken are:

(a) in the Statement of Claim filed, that there were negotiations, and an offer that he accepted, but rejected subsequently;

(b) in his e-mail of 21 April 2009, that he turned down an offer of $4.5m;

(c) in his affidavit of 31 August 2010, that he accepted the $4.5m offer “on the spot”.

without regard to consistency and credibility.

[32] Serious questions arise out of the plaintiff’s evolving presentation of his case:

(a) if he believed that there was a settlement agreement at $4.5m, why did he take the opposite position when he filed his claim?

(b) why did he send the e-mail on 21 April 2009 if he had accepted the $4.5m offer? and

(c) since he did not deny, explain or dispute that e-mail, was there any evidence, by his own case, that there was a settlement agreement at $4.5m?

[33] The draft amendments must be reviewed against O 18 r 19(1) of the Rules of Court (Cap 322, R5, 2006 Rev Ed) that:

Although the rule refers to the striking out of pleadings, the reasoning employed should be extended to prohibit any amendment which comes under (a), (b), (c) or (d).

[34] For the reasons stated in [21] and [22] supra, the alternative claim for the dividends disclosed no reasonable cause of action and is an abuse of the process of court, and the draft amendments cannot be allowed.