High Court · Decided 27 November 2015

Tan Chin Hoon and others v Tan Choo Suan (in her personal capacity and as executrix of the estate of Tan Kiam Toen, deceased) and others and other matters

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[2015] SGHC 306Case no. Suit No 570 of 2010, Suit No 170 of 2011 and Originating Summons No 921 of 2012

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Vinodh Coomaraswamy J:
Introduction
[1] Mr Tan Kiam Toen was the patriarch of the Tan family. He passed away on 15 November 2008, at the age of 89, leaving behind his widow and their five adult children. By that time, the Tan family had amassed considerable wealth through the business acumen and the efforts of Mr Tan and his family.
[2] The disposition of Mr Tan’s estate is governed by a will which he executed in Hong Kong jointly with his wife on 6 February 2008 (“the Joint Will”). The Joint Will bequeathed the bulk of the couple’s estate ultimately to charity. The Joint Will also set out the couple’s express wish that their descendants “should respect each other and live in harmony, and that no dispute or litigation should arise regarding [their] residuary estate”. Mr Tan’s wish was not to be.
[3] As is sadly typical of many cases involving a family business, the patriarch’s death was followed by a split in the family. Mr Tan’s youngest four children find themselves ranged against his widow and his eldest child. Litigation commenced in 2010 and spawned yet more litigation in 2011 and 2012. In all, there are now three sets of proceedings between the two sides. And there are now a slew of hotly-contested appeals and cross-appeals yet to come.
[4] The essence of the litigation before me is that Mr Tan’s youngest four children claim that they own in equity certain assets which are now owned at law either by Mr Tan’s widow or by his eldest child. Mr Tan’s widow claims that the assets to which she holds legal title are her property absolutely. Mr Tan’s eldest child claims that the bulk of the assets to which she holds legal title belong in equity only to Mr Tan and therefore fall to be distributed ultimately to charity under the Joint Will.
[5] Much of the difficulty in this case results from the simple fact that, quite understandably, participants in a family business repose a high degree of trust in each other which leads to a high degree of informality in their dealings. They often do not state explicitly, whether orally or in writing, the reasons and objectives underlying their dealings. They often do not document, or do not document in full, their dealings. They often do not distinguish between personal assets, family assets and business assets in their dealings. They often do not apply their minds to the proprietary consequences of their dealings. This is true even of families which have the means and the foresight to secure the best legal advice when dealing with strangers. The Tan family is no exception.
[6] The fact remains that every dealing in property carries a set of proprietary consequences in law. Determining these proprietary consequences is largely, though not exclusively, a matter of ascertaining the parties’ subjective intentions at the time of the dealing. I now have the difficult task of disentangling the proprietary consequences of a number of dealings between the parties at a distance of many years, indeed decades. That task is made all the more complicated by the inevitable temptation for the parties to put before me self-serving testimony as to their own subjective intention as well as the intentions of others involved in the dealings, framed with the benefit of hindsight and tailored to fit the forensic case which they now seek to advance.
Dramatis personae
[7] I start by introducing the members of the Tan family. For convenience (not least because the family includes four Mr Tans and two Ms Tans) and without intending any disrespect, I shall refer in this judgment to the members of the Tan family by their initials. I will therefore refer to Mr Tan Kiam Toen as “TKT”. I will refer to his widow, Mdm Ng Giok Oh, as “NGO”.
[8] The couple’s five children comprise three sons and two daughters. In order of birth, they are:
(a) Dr Tan Choo Suan (“TCS”), born in 1944;
(b) Mr Tan Choo Hoon @ Tan Cheng Gay (“TCG”), born in 1947;
(c) Mr Tan Yok Koon (“TYK”), born in 1948;
(d) Ms Tan Choo Pin (“TCP”), born in 1950; and
(e) Mr Tan Chin Hoon (“TCH”), born in 1951.
TCS is a party to these proceedings both in her personal capacity and in her capacity as the sole executrix and trustee of TKT’s estate under the Joint Will.
Procedural history
[9] The trial of the parties’ actions commenced in 2011. During the trial, on 19 July 2011, the parties reached an oral agreement to compromise their disputes (“the Compromise”). TCS, given her status as the sole executrix and trustee of TKT’s estate, insisted that the approval of the Attorney-General (“the AG”) be a condition precedent (“the Condition Precedent”) to the Compromise. She took this position because: (i) the Compromise was a major deviation from TKT’s intent as expressed in the Joint Will, which was to bequeath the bulk of his estate ultimately to charity and specifically to exclude TKT’s children as beneficiaries; (ii) TCS was afraid that her agreement to the Compromise would expose her to claims by disappointed charities because the Compromise operated to deprive the charitable beneficiaries under the Joint Will of a substantial proportion of TKT’s estate; and (iii) the AG is, at common law, the guardian of charities in Singapore and could evaluate objectively whether the Compromise was ultimately in the interests of at least the Singapore charities.
[10] As a result of the Compromise, the trial was adjourned to give the parties an opportunity to reduce the Compromise to writing and execute it, and to fulfil the Condition Precedent. Although the parties drew up a 13-point heads of agreement recording the Compromise on 19 July 2011 itself, the parties ultimately failed to agree on how to embody the Compromise in a formal and written settlement agreement. It is therefore common ground that the Compromise remains a purely oral agreement with the 13-point heads of agreement being merely evidence in writing of its terms.
[11] The parties liaised with each other until November 2011 in an effort to reduce the Compromise to writing. Starting in November 2011, the parties abandoned that effort and entered into a correspondence with the AG to fulfil the Condition Precedent. In July 2012, the AG declined to grant his consent. The Condition Precedent was and remains unfulfilled.
[12] The parties therefore returned to court in April 2013 to resume the trial.
Summary of the three matters
[13] A brief summary of the proceedings before me is now appropriate. There are three sets of proceedings before me: Suit 570 of 2010 (“S570”), Suit 170 of 2011 (“S170”) and Originating Summons 921 of 2012 (“OS921”).
S570: the main action
[14] The main action before me is S570. TYK, TCP and TCH commenced S570 in 2010 against NGO and TCS. In S570, the plaintiffs seek declarations that they are the owners in equity of certain assets. TCG is not a plaintiff in S570. That is because, according to TCG, he had no desire to sue his own mother. But TCS and NGO brought a counterclaim in S570 and joined TCG to it as the fourth defendant to their counterclaim. TCG has therefore had to enter the fray, and has done so on the side of his younger siblings.
[15] TCS’s and NGO’s counterclaim seeks declarations which are essentially to the opposite effect of those which the plaintiffs seek. They seek a determination that none of the assets which the plaintiffs claim in S570 belong in equity to the plaintiffs but instead belong ultimately either to TKT or to NGO.
[16] Throughout this judgment, I will refer to TYK, TCP, TCH and TCG collectively as the plaintiffs, even though TCG is not technically a plaintiff in S570. I will also refer throughout this judgment to TCS and NGO collectively as the defendants, even though a family company is also a defendant in S570 and two family companies are defendants in OS921.
[17] Four groups of assets are the subject-matter of S570. These assets are as follows:
(a) 2.54m shares in Afro-Asia Shipping Company (Private) Limited (“AAS”) now registered in TCS’s name (“the AAS Shares”), comprising 47.78% of its issued and paid up share capital.
(b) 2.66m shares in AAS now registered in NGO’s name, comprising exactly 50% of its issued and paid up share capital. Because this block of shares was transferred to NGO by another family known as “the Bajumi family”, I will refer to these shares as “the Bajumi Shares”.
(c) 1.75m shares in Afro-Asia International Enterprises Pte Limited (“AAIE”) now registered in TCS’s name, comprising 35% of its issued and paid up share capital, (“the AAIE Shares”).
(d) Funds from various Tan family sources which the family entrusted to TCS over time and which the plaintiffs refer to collectively as the “Tan family funds”.
[18] Additionally, it appears from the plaintiffs’ closing submissions that they also assert in S570 a claim to 1.419m shares in EnGro Corporation Limited (“EnGro”) which are now registered in TCS’s name (“the 1.419m EnGro shares”). This claim does not appear in the plaintiffs’ pleadings.
S170: the Katong Property
[19] The plaintiffs commenced S170 in 2011 against TCS as the only defendant. The sole subject-matter of this second action is a property registered in TCS’s name located at 2 East Coast Terrace (“the Katong Property”).
[20] TKT purchased the Katong Property on 31 January 1952 and registered it in NGO’s name. In 1974, NGO transferred it to TCS. TCS has been its registered owner without interruption from 1974 to the present day.
[21] In S170, the plaintiffs claim to be the owners in equity of the Katong Property. TCS resists that claim.
OS921: the Compromise
[22] OS921 is the last of the three proceedings before me. The plaintiffs commenced OS921 in 2012 against TCS, NGO and two Tan family companies. The purpose of OS921 is to uphold the Compromise as binding on the parties, even though the AG has declined to give his consent to it, and even though the Condition Precedent is therefore unfulfilled.
[23] In OS921, the plaintiffs seek substantive relief under four heads:
(a) First, a declaration that the Compromise represented a binding, full and final settlement of the disputes in S570 and S170.
(b) Second, an order rectifying the Compromise by removing the Condition Precedent on the grounds that it was included by reason of a common or a unilateral mistake; and (ii) an order that the defendants specifically perform their obligations under the Compromise so rectified.
(c) Third and in the alternative: (i) a declaration that the defendants are estopped by TCS’s allegedly wrongful conduct – as evidenced by her letters to the AG – from asserting that the Condition Precedent has not been fulfilled; and (ii) an order for specific performance of the Compromise.
(d) Finally, and in the further alternative, an order that TCS pay damages to the plaintiffs arising from her breach of the Compromise.
[24] I heard OS921 immediately before the trial in S570 and S170 was set to resume. After a five-day hearing, I dismissed the plaintiffs’ prayers to rectify the Compromise and for specific performance of the Compromise as rectified. Given that my decision to dismiss these prayers is not the subject of any appeal, I need not dwell too long on the reasons for my decision. It suffices to say that I found that the Compromise contained all the elements necessary for a contract: ie, offer, acceptance, and consideration; and that the Condition Precedent qualified the performance of the Compromise and not its formation. I therefore held that the Compromise was valid and binding on all parties, but that the parties were under no obligations as to performance if the Condition Precedent were not fulfilled. Further, I did not accept that the plaintiffs were entitled to the remedy of rectification because I did not accept that the parties were operating under a common mistake or that the plaintiffs were operating under a unilateral mistake as regards the Condition Precedent. This was simply a case where the plaintiffs had agreed to the Condition Precedent because they anticipated, wrongly as it turned out, that the AG would consent to the Compromise. In any event, I could not see how the remedy of rectification – which is available only for instruments in writing embodying a preceding oral agreement – could conceivably be available for an oral agreement which was never embodied in writing. There was therefore no basis whatsoever for equitable intervention.
[25] As for the remaining heads of relief in OS921, my view was that a decision on those heads depended on findings of fact and that I could not make those findings safely unless the parties’ evidence was tested by cross-examination. I therefore deferred my decision on the remainder of OS921 to allow the parties an opportunity to cross-examine their opponents on their affidavits. That cross-examination took place in the course of the trial in S570 and S170.
Overview of my decision
[26] Having heard the parties’ evidence and considered their submissions, I have given the following decision on the three matters before me:
(a) I have dismissed the remainder of OS921. In my view, the Compromise came to an end without any liability on any party when the AG declined to give his consent. Consequently, the parties are left to the rights underlying the Compromise, which are to be determined in S570 and S170.
(b) In S570, I have largely allowed the plaintiffs’ claims and dismissed the defendants’ counterclaims.
(c) In S170, I have dismissed the plaintiffs’ claim and allowed TCS’s counterclaim.
[27] The parties have filed a series of seven appeals and cross-appeals against my decision in S570 and OS921. My decision in S170 is not subject to appeal. For completeness, however, I shall give my grounds in respect of S170 as well.
[28] I start by setting out the facts. These facts are either agreed or represent my findings on the disputed facts.
Background facts
TKT’s history
[29] The best place to begin is with the history of the patriarch.
[30] TKT was born in 1919 into a humble family in a poor village in China. His parents died early, forcing him to survive on earnings from odd jobs that came his way. In 1935, he decided to leave China for Indonesia to seek refuge from war and to find a livelihood. Despite a lack of formal education, TKT was resourceful enough eventually to set up his own factory in Indonesia selling soya sauce.
[31] In 1943, TKT married NGO. A year later, TCS was born. The family of three moved to Singapore. TKT continued to run his business in Indonesia from Singapore. In the 1950s, TKT moved the focus of his business from Indonesia to Singapore. He traded and exported commodities through a sole-proprietorship called Thai Lee & Company (“Thai Lee”). At the same time, he ventured successfully into other fields.
AAS
The Tan family’s shareholdings in AAS
[32] By the end of the 1950s, TKT had accumulated substantial wealth. In 1961, he incorporated AAS as a vehicle for his considerable enterprise.
[33] AAS is of great significance to the Tan family. It is the family company. It is where all of TKT’s children, with the exception of TCS, channelled their ambition and efforts and worked directly or indirectly for the most part of their lives. Shares in AAS are two of the four groups of assets which form the subject-matter of S570 (see [17] above). It is, for that reason, important to trace the family members’ shareholding in AAS.
[34] TKT incorporated AAS with an initial paid-up capital of $2m. He owned AAS through two nominees who each held 50% of AAS for him. TKT’s two nominees were also directors of AAS together with TKT. But there is no doubt that TKT was AAS’s sole owner and its sole decision-maker. Sometime in 1962, AAS allotted and issued 380 shares to NGO, again as TKT’s nominee. Later that same year, NGO acting on the instructions of TKT, transferred these 380 shares to TKT.
[35] In 1965, AAS purchased the Nanyang Siang Pau Building at 63 Robinson Road and renamed it the Afro-Asia Building (“AAB”). AAS continues to own AAB to this day. Its value, of course, has increased by many multiples.
[36] In March 1967, TKT bought two other properties, No 9 and 11 Cluny Park Road (“the Cluny Park Properties”). TKT used AAS as his vehicle for this purchase and drew the necessary funds from his other business, Thai Lee.
[37] By the mid-1960s, TKT had appointed NGO a director of AAS. In 1966 or 1967, TKT’s two nominees resigned as directors and transferred all their shares to NGO. After this transfer, TKT held 380 shares and NGO held 20 shares in AAS. TKT and NGO held all the shares in AAS in this way until 1968. NGO’s position is that she held these 20 shares on trust for TKT.
TKT brings his children in as shareholders of AAS
[38] In 1968, TKT caused AAS to allot and issue 40 new shares to each of his five children for a stated consideration of $1,000 per share. TKT’s children were still young in 1968, with TCS being only 24. In fact, most of his children were not even aware then that TKT had given them shares in AAS. It is common ground that none of TKT’s children gave any consideration whatsoever for these shares. TKT drew the capital for these shares from Thai Lee. The plaintiffs’ position is that each of them became the absolute owner of the 40 shares vested in them in 1968. The defendants’ position is that each of the plaintiffs and TCS held these 40 shares each on trust for TKT.
[39] Bajumi Wahab, the patriarch of the Bajumi family, was at this time a close friend and business associate of TKT. TKT vested 300 shares of AAS in Asma, Bajumi Wahab’s eldest daughter. The plaintiffs’ position is that Asma became the absolute owner of these shares, and that this signified the beginning of a business cooperation between the Tan family and the Bajumi family. The defendants, however, assert that even Asma held these 300 shares on trust for TKT.
[40] In October 1973, TKT caused AAS to issue bonus shares. The result was that the number of shares in AAS increased six-fold, from 900 to 5400. Each child’s 40 shares in AAS correspondingly became 240 shares.
The Tan family members’ involvement in AAS
[41] The evidence shows that TKT, as a typical patriarch, had a strong desire that the Tan family keep control of the Tan family business and ownership of Tan family assets. This desire manifested itself in the high expectations he had for all of his children – but especially his sons – to come into the family business. With one notable exception, all of TKT’s children fulfilled TKT’s expectations. That notable exception was TCS.
(1) TCS
[42] TCS graduated with a degree in Mathematics and Economics in 1969. Although TKT initially brought her in to work for AAS and even appointed her a director of AAS in October 1973, she opted to leave AAS and Singapore in 1974 to continue her studies overseas. After earning a doctorate and working in Australia, she relocated to the United States where she worked in the World Bank for about a decade. In 1993, she moved to Hong Kong. Sometime in 1974, after she had left Singapore, TKT instructed her to step down as a director of AAS. As TCS acknowledges, TKT was disappointed, at least in the early years, that TCS was the only child unwilling to channel her ambition and effort into the family business.
(2) TCG
[43] As the eldest son of a traditional patriarch, TKT saw it as TCG’s duty to carry the family name and the family business forward. TCG therefore felt the considerable weight of TKT’s expectation that he would go into the family business.
[44] TCG did not, however, comply immediately with TKT’s wishes. After earning a degree in engineering from King’s College London, he started work with General Electric (USA) Consumer Electronics Pte Ltd (“GE”). This was in many ways his dream job. GE was then one of the most prestigious firms in the world for an engineer to work for.
[45] In order not to disappoint TKT, however, TCG eventually deferred to his father’s wishes. He left GE in October 1973. TKT appointed him a director and an employee of AAS. TKT promised TCG that he would have the opportunity to develop his own business ventures with the backing of AAS. From 1995 until TCS replaced him in 2004, TCG held office as chairman of AAS.
[46] TCG’s evidence is that he is primarily responsible for the steady growth in the Tan family business over the past 40 years, ie since TKT withdrew from active participation in management. I accept his evidence. His contributions have come both through his work in AAS, primarily from 1973 to 1994, and from his work in EnGro from 1973 to the present day.
(3) TYK
[47] Like TCG, TYK also initially followed a path away from the family business. He graduated with a law degree from King’s College London in 1971. He qualified as a barrister in England a year later in 1972. In 1974, he earned a Masters in Business Administration from Columbia University.
[48] At TKT’s request, TYK returned to Singapore in 1974. TKT appointed TYK a director of AAS and wanted him to come into the family business. TYK, however, wanted to practise law. After completing his pupillage with two leading firms, he was called to the bar. But even while TYK was serving his pupillage, TKT would summon him to do work for AAS.
[49] TYK began practice as an advocate and a solicitor in a sole proprietorship, Tan Yok Koon & Co, operating from Thai Lee’s premises. But he ended up spending much of his time helping TKT to run Thai Lee, AAS and the other family businesses.
[50] TYK eventually set aside his legal ambitions to focus exclusively on the family business.
(4) TCP
[51] TCP returned to Singapore in 1973 with a degree in Chemistry from the University of York. TKT started TCP off working in AAS and in AAS’s subsidiary, Oil Mills Factory Pte Ltd. TKT appointed her the company secretary of AAS in 1973 and a director of AAS in 1974. TCP’s primary role in AAS was to oversee the maintenance of AAB. TCP worked in AAS from 1973 until 2010. Her relationship with AAS came to an end when TCS terminated TCP’s employment and removed her from office in 2010.
(5) TCH
[52] TKT’s youngest child, TCH, was less academically inclined than his siblings. TKT brought TCH into the family business immediately after he completed his secondary school education in 1970. He started TCH off in AAS doing odd jobs. TCH left AAS from 1974 to 1976 to pursue his studies overseas.
[53] After TCH returned to Singapore in 1976, TKT appointed him the General Manager of AAS. In 1977, TKT appointed him a director of AAS. In 1997, TCH became the managing director of AAS. As AAS’s managing director, TCH oversaw the business, affairs and operations of AAS as well as those of its subsidiaries and related companies.
[54] At TCS’s instigation, AAS’s board of directors removed TCH as AAS’s managing director in 2007 (see [119] below) and appointed TCS in his place. TCS removed TCH from office entirely in 2010.
(6) NGO
[55] Just as TKT was, over the years, the archetypal patriarch of a business family, NGO was over the years the typical matriarch. By all accounts, she discharged her role with equal distinction. Although TKT made NGO a director of AAS as early as 1962, he did not involve her in the Tan family business or in AAS. NGO resigned as a director of AAS in 1981.
TKT withdraws from active role in AAS
[56] By the mid-1970s, TKT had withdrawn from an active role in AAS. In late 1974, TKT and NGO moved from Singapore to live permanently in Hong Kong. The parties dispute the reason for this move. They also dispute the degree of control which TKT exercised over the company thereafter. It is clear to me that from the time he left Singapore, TKT left the day-to-day running of AAS to the plaintiffs. However, it is also clear to me that the plaintiffs continued to consult TKT on major decisions and continued to permit him, as the patriarch, to have a say in its affairs. But I find that they did this because they felt a moral obligation to TKT rooted in their respect for him as their father and as the founder of AAS, and not because they acknowledged any legal obligation to do so.
[57] In March 1985, TKT resigned as a director of AAS.
TKT transfers shares to his sons
[58] At the beginning of 1975, TKT’s five children each held 240 shares in AAS. In March 1975, TKT transferred 190 shares each to TCG and TYK.
[59] In the same year, TKT made four transfers of a total of 2,440 shares in AAS to the Bajumi family. As a result of these transfers, the Bajumi family’s shareholding in AAS increased from 33.3% to 67.4%.
[60] Between 1979 and 1981, to equalise the two family’s shareholdings in AAS, a substantial number of shares from the Bajumi family were transferred to TKT’s three sons. The consideration for the transfers once again came from Thai Lee. These transfers can be summarised as follows:
(a) In 1979, Bajumi Wahab transferred 80 shares to each of TCG, TYK and TCH for a consideration of $100,000 for each transfer.
(b) In 1980, Asma transferred 130 shares each to TCG and TYK for a consideration of $169,000 for each transfer.
(c) Also in 1980, Asma transferred 140 shares to TCH for a consideration of $182,000.
(d) In 1981, Asma transferred 100 shares to each of TCG, TYK and TCH for a consideration of $130,000 for each transfer.
[61] The result is that, by 1981, the Tan family and the Bajumi family each owned exactly half of AAS’s shares. Although the defendants’ position is that the Bajumis initially held shares in AAS as nominees of TKT, they too agree that by 1981, the Bajumi family owned their half of the shares in AAS absolutely.
[62] As AAS grew, there were other changes to its capital structure. In 1981 and 1983, AAS declared bonus shares. In 1984, AAS reduced its capital and, at the same time, issued a further 1.75m bonus shares.
[63] In 1985, after TKT had stepped down as a director of AAS, he transferred all 19,710 shares in his name to TCH. The transfer was recorded to be for a consideration of $394,200. The source of this consideration and the circumstances surrounding this transfer are disputed by parties. I deal with this at [222] – [226] below.
[64] The result of all of the foregoing transactions was that in 1985, the shareholding in AAS was as follows:
[65] The plaintiffs’ position is that each Tan family shareholder in 1985 was the absolute owner of the shares of AAS registered in his or her name as set out in the table above. All of the subsequent transfers of shares in AAS, they say, conveyed only a bare legal title to the transferee leaving the transferor’s beneficial interest unchanged. The remedy which the plaintiffs seek in respect of the AAS shares in S570, therefore, is to restore their respective shareholdings in AAS to where they stood in 1985, subject to the necessary adjustments to account for changes in its capital structure since then.
[66] It is therefore necessary now to trace these subsequent transfers.
The AAS Shares
[67] Between 1986 and 2008, four transfers of shares in AAS took place. The result of these transfers is that TCS became the sole registered shareholder of about 43.3% of AAS. Part of the dispute in S570 is over the proprietary consequences of these transfers. TCS’s position is that these shares were held by the transferors on trust for TKT and were therefore held by her on trust for TKT.
[68] The first transfer took place in 1986. Just before he left Singapore for the United States to pursue business opportunities, TYK transferred all 243,090 of his shares in AAS into the joint names of TCS and TCG. It is common ground that neither TCS nor TCG provided any consideration for the transfer. Even though he no longer held any AAS shares, TYK continued to hold office as a director of AAS. TYK returned to Singapore from the United States only in 1995.
[69] The second transfer took place almost four years later, in 1990. TCH transferred all 203,670 of his shares in AAS into the joint names of TCS and TCG. Again, TCS and TCG provided no consideration for the transfer.
[70] In 1994, AAS issued two bonus shares for every one share held by every registered shareholder. As a result, each registered shareholder ended up with three times the number of shares previously held. That exercise obviously had no change in each shareholder’s percentage of the total shares in AAS. Following these transfers and the bonus issue of shares in 1994, TCG held 729,270 shares in his sole name and TCS and TCG held 1,340,280 shares in their joint names.
[71] The third transfer took place in 1997. By three transfers, TCG transferred all of his shares in AAS to TCS, TYK and TCH. Again, none of the transferees provided any consideration for these transfers. The specific transfers were:
(a) TCG transferred 727,270 shares held in TCG’s sole name to TCS;
(b) TCG transferred 1,000 shares held in TCG’s sole name to TYK;
(c) TCG transferred 1,000 shares held in TCG’s sole name to TCH; and
(d) TCG transferred 1,340,280 shares held in TCG’s and TCS’s joint names to TCS alone.
The purpose of TCG’s transfer of 1,000 shares each to TYK and TCH was to confer on the transferees the status of shareholders in AAS in connection with the litigation between the Bajumi family and the Tan family over AAS, amongst other things (see [78] – [80] below).
[72] As a result of all these transfers, AAS’s register of members in 1997 stood radically transformed from 1985. The Bajumis and the Tan family continued to hold 50% of the total share capital each. But the biggest registered shareholder from the Tan family was now TCS. She held a total of 2,304,070 shares, representing about 43.3% of AAS. NGO, TCP, TYK and TCH held the remaining Tan family shares, representing only about 6.7% of AAS. TCG held no shares in AAS at all.
[73] The fourth transfer took place more than a decade later, in 2008. TCP transferred all 236,520 of her shares in AAS to TCS. Again the transfer was for no consideration. Indeed, the contemporaneous records state expressly that the transfer was by way of gift.
[74] Although the other members of the Tan family did not know it at the time, TCP executed a statutory declaration a day before the transfer. In the statutory declaration, she declared that the transfer of the shares to TCS as a gift was null and void. On 30 November 2009, as the dispute which has led to these proceedings was brewing, TCP demanded that TCS return these shares to her. TCS has not complied with this demand. These shares form part of TCP’s claim in S570.
[75] Apart from these four transfers of shares in AAS between the siblings, there are three other transfers that I should mention. First, in 2004, in circumstances to which I will come, the Bajumi family transferred their 50% of AAS to NGO. Second, in 2006, TYK transferred to TCS the 1,000 shares which TCG had transferred to him in 1997. Finally, in 2008, TCH transferred to TCS the 1,000 shares which TCG had transferred to him in 1997.
[76] Since 2008, as a result of all of these transfers, NGO and TCS have been the only two shareholders in AAS. NGO holds 52.22% of AAS and TCS holds 47.78% of AAS.
The Bajumi Shares
[77] The plaintiffs also lay claim in S570 to the 50% shareholding in AAS which the Bajumi family transferred to NGO in 2004. I therefore move on to recounting the facts relating to the Bajumi Shares.
Relationship between the families frays
[78] Towards the end of 1994, relations between the Bajumi family and the Tan family began to fray. The dispute began over the ownership of a company called PT Bumi Rambang Kramajaya (“PT BRK”). PT BRK was a company incorporated in Indonesia for the purpose of investing in a rubber plantation. AAS held 40% of the shares in PT BRK, TCS held 10% of the shares and the Bajumi family held the remaining 50%. The rubber plantation proved to be a very lucrative investment. The relationship between the two families became strained when Bajumi Wahab took the position that PT BRK belonged solely to the Bajumi family. The dispute came to a head in 1995 when the Tan family voted not to re-elect two of Bajumi Wahab’s sons as directors of AAS at the company’s Annual General Meeting.
[79] In 1996, the Bajumi family brought winding up and minority oppression proceedings against AAS and the Tan family. I will refer to these proceedings as the “Bajumi litigation”. In the Bajumi litigation, the Bajumi family sought an order to wind up AAS and to transfer the Indonesian rubber plantation to them.
The DBS Term Loan
[80] The Bajumi litigation was finally settled in 2004 by an agreement recorded in a consent order. As a result of the settlement, the Tan family paid $7.6m to the Bajumi family to acquire their 50% shareholding in AAS.
[81] The parties disagree on who should rightly be regarded as the ultimate source of the $7.6m consideration for the Bajumi Shares. What is clear is that the immediate source of the $7.6m was a term loan in that amount in 2004 from the Development Bank of Singapore (“DBS”). I will refer to this as the “DBS Term Loan”. Only four members of the Tan family – NGO, TCS, TCP and TCH – are recorded as the borrowers of the DBS Term Loan.
[82] As security for the DBS Term Loan, DBS took a mortgage over the Katong Property and a charge over a cash deposit of US$2.8m placed by TCS with DBS. The funds for this cash deposit came from a loan taken by Balmain Industries Limited (“Balmain”), another Tan family vehicle, from the Hong Kong branch of Barclays Bank (“the US$2.8m Balmain deposit”). The directors of Balmain were TKT, NGO and TCS. After Barclays released the proceeds of the US$2.8m loan to TCS’s account with DBS, she placed that sum on fixed deposit with DBS.
[83] DBS debited the monthly interest on the DBS Term Loan from a joint account with DBS held by TCS and TCH. The parties refer to this joint account as the “No 2 Account” because the rent from the Katong Property (ie, No 2 East Coast Terrace) was deposited into this account.
[84] In 2005, TCS arranged for a total of $7.66m to be paid to DBS in order to discharge in full the DBS Term Loan. This sum comprised the US$2.8m Balmain deposit together with dividends which AAS had declared a few days earlier.
Transfer of the Bajumi Shares to NGO
[85] About a month after the settlement of the Bajumi litigation, TKT called a family meeting (“the 2004 Family Meeting”). Although TKT was no longer a shareholder or a director of AAS, his children continued to respect him as their father and as the founder of AAS. They therefore attended the 2004 Family Meeting.
[86] The parties dispute what was agreed at the 2004 Family Meeting. But it is undisputed that, as a result of that meeting, the Bajumi family transferred the Bajumi Shares (ie, 50% of the shares in AAS) to NGO in 2004. Taken with her existing shareholding of 2.22% in AAS, NGO thereby became (and remains) the registered owner of 52.22% of AAS.
[87] The dispute between the parties is whether NGO holds these shares absolutely or on trust for the Tan family members.
The 2005 Trust Deed in favour of TCS
[88] On 31 May 2005, NGO executed a trust deed in favour of TCS (“the 2005 Trust Deed”). In the 2005 Trust Deed, NGO declared that she held the Bajumi Shares on trust for TCS. TCS’s position, however, is that NGO owns the Bajumi Shares absolutely. TCS therefore renounced all her right to and interest in the Bajumi Shares in 2010, shortly before S570 commenced.
The 2002 and 2003 AAS Shareholder Loans
[89] The proceeds of sale of the Cluny Park Properties (“the Cluny Park Proceeds”) feature in the plaintiff’s claim as a component of what they have called the Tan family funds in which they claim an equitable interest. I therefore now recount the facts relating to the Cluny Park Proceeds.
[90] The Tan family had always been concerned that the Bajumi family would use their 50% shareholding in AAS to lay claim to the Cluny Park Properties or to the Cluny Park Proceeds, even though neither the Bajumi family nor AAS had contributed to the purchase of the properties. In 1992, TKT procured a written declaration from the Bajumi family acknowledging that they had no interest in the Cluny Park Properties. Despite this acknowledgment, as the relations between the two families deteriorated, TKT’s concern increased. To ensure that there was no way for the Bajumi family to claim a stake in the Cluny Park Proceeds, the Tan family decided to take the Cluny Park Proceeds out of AAS through shareholders’ loans.
[91] In early 2002, AAS remitted just under $39m, comprising the Cluny Park Proceeds, to TCS’s personal bank accounts in Hong Kong. I shall refer to this remittance as the “2002 AAS Shareholder Loans”. Thereafter, sometime in the last quarter of 2003, AAS remitted a further sum of US$2.35m (approximately $4.04m) ultimately to TCS’s personal bank accounts in Hong Kong. I will refer to this as the “2003 AAS Shareholder Loans”.
[92] AAS recorded both these remittances as loans extended to each Tan family shareholder of AAS in proportion to that Tan family shareholder’s percentage of the Tan family’s total block of shares in AAS at that time, ie, ignoring for this purpose the 50% of AAS owned by the Bajumis. NGO, TCS, TYK, TCP and TCH were thereby recorded as debtors of AAS. TKT and TCG, who did not own any shares in AAS at that time, were not recorded as debtors of AAS.
[93] TCS held the proceeds of the two shareholders’ loans and used them from time to time in accordance with TKT’s directions. Thus, for example, she used part of this money to purchase the EnGro shares which AAIE now holds (see [103] below).
[94] By the end of 2008, the 2002 AAS Shareholder Loans and the 2003 AAS Shareholder Loans had been substantially paid down. This was achieved by a combination of methods. Between 2005 and 2008, AAS declared four rounds of dividends. TCS received the Tan family’s dividends and used them to pay down the shareholders’ loans. Further, in 2005, TCS remitted part of the unused proceeds of the two shareholders’ loans to the accounts of her siblings, who then remitted the money to AAS to pay down the debt to AAS. This exercise was repeated six times.
[95] AAS’s accounts for the year ended 31 December 2009 reflect that the shareholders’ loans owed by TYK, TCP and TCH had been repaid in full and that NGO owed AAS slightly over $1.37m while TCS owed AAS slightly over $13m.
EnGro and AAIE
[96] I move on to the facts relating to EnGro and AAIE.
EnGro
[97] Shares in EnGro feature directly or indirectly in the plaintiffs’ claims in S570 in three ways. First, Engro shares are the only substantial asset of AAIE. The plaintiffs claim that they own in equity the bulk of TCS’s shares in AAIE and therefore indirectly the bulk of AAIE’s EnGro shares. Second, TCS is the registered owner of 1.419m Engro shares. The plaintiffs also claim to own in equity the bulk of TCS’s shares in EnGro. Finally, a substantial part of AAS’s assets continues to be the shares it owned in EnGro and which it did not transfer to the Bajumis as part of the settlement of the Bajmi litigation (see [80] above).
[98] EnGro is a listed company. TCG has spent virtually his entire working life in EnGro. He is today its Chairman and Chief Executive Officer. TCS’s case is that TKT, and not TCG, was responsible for establishing EnGro and developing its business. I do not accept that. TCG, and to a lesser extent TYK, were instrumental in establishing EnGro and in developing its business.
[99] Engro started life in 1973 as a tripartite joint venture between Ssangyong Cement Industrial Company Limited (“Ssangyong”), AAS and DBS. TCG and an officer of DBS were its two subscribing shareholders.
[100] In 1975, AAS appointed TCG as its representative in EnGro. A few years later, TYK began his involvement in EnGro’s business. The two brothers were subsequently appointed directors of EnGro.
[101] In 1982, TCG was appointed EnGro’s Chief Executive Officer and in 2002, he was appointed Chairman. As I have mentioned, he continues to hold both positions to the present day.
AAIE’s EnGro shares
[102] I move on to AAIE. AAIE is a pure investment holding company. TCS and TCP are each the registered owners of 1.75m shares in AAIE which together comprises 70% of its issued and paid up share capital. A third party unrelated to this litigation is the registered owner of the remaining 30% of AAIE. The plaintiffs claim to own in equity the bulk of the 35% of AAIE which is registered in TCS’s name.
[103] AAIE’s only real asset is 1.424m shares in EnGro and its only real source of income is the stream of dividends which EnGro pays on those shares. AAIE purchased the 1.424m shares in EnGro from Ssangyong, who wanted to sell down its stake in EnGro. The Tan family advanced to AAIE 70% of the funds which it needed to purchase these EnGro shares while the other shareholder advanced the remaining 30%. TCS was the immediate source of the Tan family’s advance. The ultimate source of the Tan family’s advance was the Cluny Park Proceeds channelled to TCS via the 2002 AAS Shareholder Loans and the 2003 Shareholder Loans (see [89] above).
[104] The funds which the Tan family advanced to AAIE amounted to more than $19.6m as at 31 December 2002 and $22.1m as at 31 December 2003. AAIE recorded these funds as loans in equal amounts from TCS and TCP each to AAIE. I will refer to these loans collectively as the “the AAIE Loans”. AAIE repaid the AAIE Loans over time from the Tan family’s 70% share of AAIE’s stream of EnGro dividends. TCS alone received and held AAIE’s repayment.
TCS’s EnGro shares
[105] In 2007, Ssangyong again wanted to sell down its stake in EnGro. The Tan family saw this as a good opportunity to increase their stake in EnGro, given that the shares were being offered at a favourable price. Over two months, through several transactions in the market, a total of 1.419m shares in EnGro were purchased in TCS’s name.
[106] The parties dispute the circumstances surrounding the purchase of these shares. The plaintiffs’ case is that the purchase was financed by what they call Tan family funds, drawn from the No 2 Account as well as from funds held in Hong Kong, and that TCS therefore holds these shares as a nominee for the Tan family. TCS, on the other hand, asserts that the funds used to pay for these shares belonged to TKT, who gifted the shares to her.
The Katong Property
[107] I move on to set out the facts relating to the Katong Property, which is the subject-matter of S170. As I have mentioned, the Katong Property has been registered in TCS’s name without interruption since 1974.
The Katong Property
[108] TKT purchased the Katong Property in 1952 in NGO’s name. It was in fact part of a bigger piece of land which TKT bought. But he sold most of the land and built a house on the remaining part which he kept. The Tan family used the Katong Property as their family home from 1958 until they moved into the Cluny Park Properties in 1969.
[109] Although the parties dispute TKT’s intention in registering the Katong Property in NGO’s name upon purchase, it is common ground that it was TKT’s decision to do so. It is also common ground that TKT provided the entire consideration for the purchase.
[110] More than two decades later, on 31 December 1974, NGO transferred the Katong Property to TCS. The reason for this transfer is fiercely disputed.
[111] From the 1980s, the Katong Property earned a rental income which was deposited over the years into the No 2 Account (see [83] above). Sometime in 1992, TCP moved back into the Katong Property with her family. She continued to reside there rent-free for the next 15 years, until 2007. From about 2002, TKT and NGO started spending more time here in Singapore and lived in the Katong Property whenever they were here.
[112] In 1981, while TCS was studying in Australia, she executed a power of attorney in favour of TCG. By this power of attorney, TCS conferred on TCG the full power and authority to deal with the Katong Property on her behalf.
[113] In 2004, the Katong Property was mortgaged to DBS as security for the DBS Term Loan used to finance the purchase of the Bajumi Shares (see [82] above).
The No 2 Account
[114] As I have mentioned, the monthly rental income for the Katong Property was deposited in the No 2 Account. The No 2 Account is also one of the assets that the plaintiffs claim falls within what they claim as the Tan family funds.
[115] It is common ground that TCS and TCH opened the No 2 Account in the 1970s as a joint account. TCH was authorised to be the sole signatory of the account up until 1991. Thereafter, TCS left cheques signed in blank and drawn on the No 2 Account with AAS staff to be used to pay for expenses.
[116] Over the years, the siblings used funds in the No 2 Account for various purposes. These ranged from paying TKT’s and NGO’s living expenses to servicing the monthly interest on the DBS Term Loan. The Tan siblings even used the money in the No 2 Account for personal expenses. For example, TYK withdrew $300,000 from the account to pay towards the purchase of an apartment in Ardmore Point and withdrew a further $5,000 a few months later to pay for the renovation of the apartment. In most instances, the Tan siblings would keep TCS informed if they used money from the No 2 Account for their own purposes.
TCS begins to exert influence and control in AAS
[117] I have now set out the facts which explain how the assets in dispute came to be acquired and are held as they are today. I turn now to the events which have triggered this litigation.
[118] Until the 2000s, TCS had had little or no involvement in AAS or the family business, given that she had been overseas since 1974. After the Bajumi litigation ended in 2004, however, TCS began to exert greater control over AAS and greater influence over her parents. It was also in 2004 that TCG and TYK withdrew from AAS in order to focus their time and energy on developing EnGro, thereby leaving a vacuum in AAS.
[119] In January 2007, TCS proposed to TKT that TCH should resign as the managing director of AAS, a position he had held since 1997. TCH was powerless in the face of this proposal. AAS’s board of directors removed TCH as managing director on 25 January 2007 and appointed TCS in his place. Despite this, TCH continued to perform largely the same duties in AAS as he had before his resignation.
[120] On 25 February 2008, after a hiatus of over 20 years, TKT and NGO were re-appointed as directors of AAS. The plaintiffs’ evidence is that TCS was behind their desire to be re-appointed. I accept this. As I have mentioned, NGO had resigned as a director of AAS in 1981 (see [55] above) and TKT had resigned as a director in 1985 (see [57] above). Left to their own devices, there was no reason either of them should want to seek re-appointment as a director in 2008, after having withdrawn decades earlier.
TKT passes away
[121] TKT passed away on 15 November 2008. Relations between the Tan siblings deteriorated sharply after TKT’s death. In August 2009, TCH wrote to TCS to demand that she return the AAS shares which TCG, TYK and he had transferred to her in the past. In November 2009, TCP issued her own separate demand for the return of the shares she had earlier transferred to TCS. TCS refused to comply with both demands. Her position was, and still is, that all the siblings who transferred their shares in AAS to her held those shares merely as TKT’s nominees; and that she therefore now holds all of the shares in AAS which are today registered in her name on trust for TKT’s estate to be dealt with in accordance with the terms of the Joint Will.
[122] In January 2010, TCH proposed that TCG be re-appointed as a director of AAS in order for the company to tap his expertise. TCP, in her capacity as the company secretary, issued a notice convening a meeting of the directors of AAS on 29 January 2010 to consider and pass a resolution reappointing TCG as a director. TCS strongly objected. She sent a curt email to TCP and TCH stating that TKT’s wish when he was alive was that TCG was not to be involved in the business of AAS. TCS also demanded that TCP withdraw the notice, failing which TCS said she would convene an extraordinary general meeting (“EGM”) of AAS in Hong Kong to remove TCP and TCH from office. She further told them that their proposed resolution would never pass because NGO and TCS would vote against it, and because TCS held the casting vote as the chairperson.
[123] TCP and TCH refused to comply with TCS’s demand. TCS made good on her threat. She issued a notice on 27 January 2010 for an EGM of AAS to be held on 28 January 2010, one day before the directors’ meeting which TCP’s notice had convened, to remove TCH and TCP from office. TCS sent an ultimatum on 28 January 2010, demanding that TCP and TCH withdraw their notice by 10.30 am that day. They refused. TCS’s EGM went ahead on 28 January 2010. TCP was removed as the company secretary and TCS appointed in her place. TCH was removed as a director and an external accountant appointed in his place.
[124] On 9 February 2010, TCH instructed his solicitors to write to TCS to demand that she take immediate steps to reinstate him as a director of AAS. She refused.
[125] The plaintiffs’ case is that these resolutions passed at AAS’s EGM of 28 January 2010 are invalid. They assert that TCS and NGO held their shares in AAS on trust for them and had no right to exercise the votes attached to those shares so as to remove them from office.
[126] This episode was the catalyst for the plaintiffs to commence S570 on 4 August 2010. Among the relief they seek is a declaration that they are the beneficial owners of the shares in AAS in the same proportions as they held their shares in 1985 (see [64] above).
[127] On 9 October 2010, TCG received a letter informing him of a directors’ resolution excluding him from AAS’s premises. TCG responded on 29 October 2010 with a letter asking for an explanation. He received no reply. Thereafter, TCS barred TCP, TCH and TCG from entering AAS’s premises, even to remove their personal belongings. They had entered these premises freely for over 40 years. Eventually, TCS relented and permitted the plaintiffs to enter AAS’s premises for the limited purpose of removing their personal belongings, but not until solicitors had intervened and not without imposing a number of conditions. The impasse between the two camps continued throughout these proceedings.
The Hong Kong litigation
[128] TKT’s estate is governed by the Joint Will (see [2] above). None of the parties dispute the validity of the 2008 Joint Will. But the parties are embroiled in yet more litigation in Hong Kong regarding the interpretation of a phrase in Chinese which appears in the Joint Will. That phrase has been translated to me as “under our names” or, when applied to TKT’s estate alone, as “under my name”. The question in the Hong Kong litigation is whether, on its true construction, the scope of TKT’s Joint Will is restricted to assets in which TKT had a legal interest at the time of his death, or whether the Joint Will extends to all assets in which he had any type of proprietary interest, including a beneficial interest.
[129] The Hong Kong litigation went all the way to the Hong Kong Court of Final Appeal. On 5 November 2015, the Court of Final Appeal (Ma CJ, Ribeiro, Tang and Fok PJJ and Neuberger NPJ) handed down its decision. It upheld the decision of the Hong Kong Court of Appeal, which had in turn upheld the decision of the Hong Kong Court of First Instance. The Hong Kong Court of Final Appeal held that “under my name” on its true construction extends to all property in which TKT had any type of proprietary interest, including a beneficial interest.
[130] I describe the Hong Kong litigation only to note it. Its outcome has no direct bearing on the litigation before me. The Hong Kong litigation and the litigation before me operate on separate planes. The Hong Kong litigation had to do with the scope of the Joint Will. The litigation before me has determined the extent, if any, to which TKT has a beneficial interest in the assets claimed by his estate. The scope of the Joint Will is not in issue in the litigation before me.
Conclusion on the background facts
[131] Having summarised (to the extent possible) the background to this dispute, I move on to discuss my decision on the parties’ claims and counterclaims.
[132] I start with the last set of proceedings to be commenced: OS921. The outcome of OS921 determines whether I need to decide S570 and S170. That is because if the Compromise indeed binds the parties, the disputes over their underlying rights in S570 and S170 fall away.
OS921: the Compromise
The parties’ positions
[133] To summarise: the Compromise was subject to a condition precedent that the AG must consent to the terms of the settlement. I have found that the condition precedent did not prevent a valid contract from coming into existence, but did qualify the parties’ performance obligation. I have rejected the plaintiff’s claim that the Compromise is tainted by mistake (see [24] above). Each side having had the opportunity to test the opposing side’s evidence by cross-examination, I have now to decide the plaintiffs’ alternative case, which is essentially that TCS breached the terms of the Compromise.
[134] It is undisputed that the Compromise does not oblige the parties, expressly or impliedly, to procure the fulfilment of the Condition Precedent, ie, neither party undertook an unqualified contractual obligation to ensure that the AG consented. It is also undisputed that the Compromise does not expressly oblige the parties to use their best endeavours to bring about the fulfilment of the Condition Precedent. Nor does the Compromise expressly oblige the parties to cooperate with each other in pursuing the fulfilment of the Condition Precedent.
[135] The plaintiffs’ entire case on breach of contract relies on implying a term into the Compromise which imposes a duty on the parties to cooperate with each other to bring about the fulfilment of the Condition Precedent. The plaintiffs contend that TCS’s correspondence with the AG amounts to a breach of this implied term. The consequence of this breach, they argue, is that TCS ought to be required specifically to perform her obligations under the Compromise and cannot be allowed to resist that result by relying on the AG’s failure to consent to it. In the alternative, they submit that TCS should be held liable for all damage that the plaintiffs have suffered as a result of her breach of this implied term.
[136] TCS’s response is that she did not breach the implied duty to cooperate. She argues that the implied duty to cooperate obliged her only to take reasonable steps to provide all relevant information to the AG and to assist the AG in coming to an independent decision on whether to consent to the Compromise. She submits that she did not have any obligation to try to convince the AG to give his consent. Indeed, she submits that she could not have had – and would not have undertaken – any such duty in light of her duties to TKT’s estate as its executrix and trustee. TCS points out that she insisted on including the Condition Precedent so as to ensure that she could not be sued by any of the disappointed beneficiaries under the Joint Will for distributing TKT’s assets in a way which did not accord with the will. If the plaintiff’s position is accepted, she submits, that purpose would be defeated.
The issues
[137] The issues I have to deal with in OS921 are:
(a) whether TCS is subject to an implied duty to cooperate with the plaintiffs under the Compromise; and
(b) if so, whether TCS’s conduct in her correspondence with the AG amounts to a breach of the duty.
I consider each issue in turn.
Is there an implied duty to cooperate?
[138] I accept the plaintiffs’ submission that the courts may imply a duty to cooperate into a contract where the object of the contract can be achieved only with the cooperation of both parties to the contract.Chitty on Contracts Volume I: General Principles (H G Beale, gen ed) (Sweet & Maxwell, 31st Ed, 2012) (“Chitty on Contracts”) discusses this issue at para 13-012:
[139] The quote in the passage above originates from the case of Mackay v Dick and others (1881) 6 App Cas 251 (“Mackay v Dick”). In that case, a contract to sell a digging machine was subject to a condition precedent that the seller demonstrate to the buyer that the machine was capable of excavating a given quantity of clay in a fixed time on a “properly opened-up face” at a certain railway cutting. The machine was taken to the agreed railway cutting but the buyer failed to make available a “properly opened-up face” for the test. The machine broke down on testing. The buyer refused to carry out any further tests and argued that he was not bound to purchase the machine because the seller had failed to fulfil the condition precedent. The House of Lords held that buyer had breached an obligation to cooperate which was an implied term of the parties’ contract.
[140] Closely linked to the duty to cooperate is a principle known as the “prevention principle”. This principle is summarised in Chitty on Contracts at para 13-013, immediately following para 13-012 cited above:
[141] The duty to cooperate and the prevention principle have been recognised in Singapore. In Evergreat Construction Co Pte Ltd v Presscrete Engineering Pte Ltd [2006] 1 SLR(R) 634 (“Evergreat”) V K Rajah J (as he then was) stated (at [48]):
Rajah J quoted the same passage from Stirling v Maitland (1864) 5 B & S 840 cited in para 13-013 of Chitty on Contracts (see [140] above) and recognised the cooperation principle when he stated at [49] that:
[142] Rajah J in Evergreat also recognised the prevention principle. The prevention principle is invoked if a party is asserting a contractual right or claiming a contractual benefit which is a direct result of that party’s prior breach of contract: see Evergreat (at [52]). Rajah J explained the rationale behind the prevention principle at [51]:
[143] This makes eminent sense. If two parties enter into a contract subject to a condition precedent which can be satisfied only if both parties cooperate, a term may readily be implied that both parties are under an obligation to cooperate in order to facilitate the fulfilment of that condition. Similarly, if a contract expressly provides that the contract will ipso facto determine upon the happening of a certain event, that provision will be construed subject to the principle that neither party can be allowed to rely on an event which is attributable to his own act or default to escape from his contractual obligations (see Alghussein Establishment v Eton College [1988] 1 WLR 587 at 594 and Evergreat at [51]). To hold otherwise would be to allow a party to take advantage of his own wrong.
[144] In my view, while the implied duty to cooperate and the prevention principle are conceptually different, they are related and their operation may overlap in practice. In the present case, I am satisfied that the two involve the same inquiry because the plaintiffs are arguing essentially that TCS breached the duty to cooperate thereby preventing the AG from giving consent, and therefore cannot be allowed to rely on the AG’s refusal to give consent to deny that the parties are obliged to perform the Compromise.
[145] I readily imply a duty to cooperate into the Compromise. An implied term to that effect is necessary in the business sense in order to give the Compromise efficacy. I also have no doubt that the parties would have responded with an emphatic affirmation had the existence of the duty to cooperate been suggested to them when they entered into the Compromise. In these circumstances, it is appropriate to imply a duty to cooperate to give effect to the parties’ presumed intention: Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appeal [2013] 4 SLR 193 at [93] and [101].
[146] The true issue dividing the parties, of course, is not so much the existence of a duty to cooperate but its scope. Applied to the facts of this case, the plaintiffs submit that the duty to cooperate not only required the parties to cooperate in answering the AG’s questions and to provide him the information he asked for, but also barred the parties from doing anything which would lead the AG to withhold his consent. Counsel for TCS, on the other hand, argues that the content of the implied duty to cooperate is only to do what is reasonable for that party to do in the surrounding circumstances.
[147] TCS’s position on this must be correct. Ong Hun Seang and others v Yeoh Oon Teik and others [1996] 2 SLR(R) 488 (“Ong Hun Seang”) recognises that the duty to cooperate extends only to doing what is reasonable in all the circumstances. In that case, the purchasers of a group of residential units sued their vendors for the return of the deposit paid against the purchase price of those units. The purchasers argued that the vendors had breached their implied duty to cooperate with the purchasers in their efforts to secure a licence which they required to hold the units. The complaint was that the vendors had failed or neglected to execute two forms necessary to change the use of the units, which was said to have resulted in the purchasers’ failure to obtain the licence.
[148] Lim Teong Qwee JC implied a term that the purchasers and the vendors would cooperate in securing the required licence and that they would do nothing to prevent the licence from being secured in sufficient time to enable completion on the contractual date. But Lim JC observed that the implied duty to cooperate requires the parties to do only what is reasonable in the circumstances. At [56] of the judgment, he noted that the implied term pleaded by the purchaser in its statement of claim required that each party “would promptly do all that was necessary on its part for the completion of the sale and purchase … and that the [vendors] would cooperate with and/or assist the Plaintiffs to obtain the licence”. He found difficulty in implying a duty to assist but agreed that there was a duty to cooperate, albeit qualified by reasonableness (at [57]):
[149] Therefore, the implied duty to cooperate in this case entails each party doing no more than that which is reasonable in all the circumstances. On the facts of this case, the duty encompasses at least providing the AG relevant information which he reasonably requires to make an informed decision about whether to grant his consent. The duty would obviously also prevent a party from providing false information to the AG. The crucial question is whether the duty equates to an obligation to become an advocate: emphasising the positive and de-emphasising the negative in an effort to persuade the AG to give his consent.
[150] Bearing these observations in mind, I now turn to consider whether TCS breached her implied contractual duty to cooperate.
Did TCS breach the implied duty to cooperate?
TCS’s conduct
[151] By November 2011, the parties had tried and failed to reduce the Compromise to writing and were trying to agree the terms of a joint approach to the AG to secure his consent to the Compromise. Instead of waiting to reach agreement on a joint approach, TCS wrote to the AG unilaterally. That letter commenced a three-way correspondence which lasted ten months, from November 2011 to August 2012.
[152] To determine whether TCS breached her implied duty to cooperate, I will focus on the correspondence between TCS and the Attorney-General’s Chambers (“AGC”). Some of the key exchanges in that correspondence are as follows:
(a) On 14 December 2011, the AGC sought clarification from the parties. TCS responded on 16 December 2011 explaining that the Condition Precedent was put in place because the terms of the Compromise envisaged that a substantial part of TKT’s estate would be transferred to the plaintiffs, thereby reducing the amount that would be available for distribution to the charities in Singapore.
(b) On 7 March 2012, AGC asked TCS to respond on three issues:
Issue 1: Her opinion, as the executrix and trustee of TKT’s estate, as to whether the Compromise was beneficial to, or in the interest of, the charities in Singapore.
Issue 2: The proportion of TKT’s estate that would be transferred to the plaintiffs under the Compromise, and the amount that would remain available to the charities in Singapore after deducting certain specific bequests amounting to HK$200m set out in the Joint Will.
Issue 3: TCS’s assessment on whether there would be sufficient funds left in TKT’s estate to satisfy her obligations as the executrix and trustee of the Joint Will.
(c) On 30 March 2012, TCS responded to the issues as follows:
Issue 1: The Compromise would reduce the portion of TKT’s estate that could otherwise be given to charitable causes.
Issue 2: The value of TKT’s estate was approximately $121m, and the Compromise would result in approximately $90m being transferred to the plaintiffs based on the information available at that time.
Issue 3: There should be sufficient funds left in TKT’s estate to meet the two specific bequests of HK$200m set out in the Joint Will, but the remaining funds available for donations to the other charities in Singapore would be diminished.
(d) On 18 April 2012, the AGC replied stating that the AG was not in a position to represent the interests of named Singapore charities in consenting to a settlement agreement “for the purpose of compromising a legal proceeding to which the [AG] is not a party”. Thus, the AGC stated that the AG would confine his consideration of the issue only to the unnamed charitable interests in Singapore. Paragraph five of the letter indicated that the AG was inclining towards not giving his consent:
(e) On 14 May 2012, the plaintiffs’ solicitors wrote to the AGC in an attempt to persuade the AG to reconsider his tentative view and to consent to the Compromise. Specifically, the plaintiffs pointed out that:
(f) TCS responded on 18 May 2012 correcting what she characterised as “factual inaccuracies” in the plaintiffs’ letter.
(g) On 23 May 2012, the AG declined to give his consent to the Compromise:
(h) Dissatisfied with the outcome, the plaintiffs wrote to the AGC through their separate solicitors on 30 May 2012. They also sought clarification from the AG and asked for a meeting with the AG or his representatives.
(i) On 8 June 2012, solicitors of all the parties had a meeting with officers from the AGC. Thereafter, the AGC asked for further information from the parties via a letter dated 14 June 2012.
(j) On 29 June 2012, TCS responded through her solicitors. The important parts of her letter read:
[153] On 9 July 2012, the AGC wrote to all parties informing them that the AG maintained his previous position and declined to consent to the Compromise.
TCS did not breach the implied duty to cooperate
[154] I move on to consider whether TCS’s conduct in her correspondence with the AGC and the plaintiffs amounts to a breach of her implied duty to cooperate.
[155] The plaintiffs contend that TCS’s conduct throughout the correspondence with the AGC was the reason the parties failed to obtain the AG’s consent. They submit that her refusal to cooperate was apparent right from the start, when she unilaterally issued her own letter to the AG while the plaintiffs were still liaising with her in hopes of presenting a joint agreed letter to the AG. This, they argue, set the tone from the start, especially given that TCS emphasised in the letter that she faced difficulty in reaching an agreement and finalising a written draft of the agreement with the plaintiffs.
[156] The plaintiffs further submit that TCS took a wholly obstructive position, severely understating the merits of the plaintiffs’ claims, falsely asserting that the Compromise would result in substantial funds being diverted from charities, insinuating in her letters that the plaintiffs had misrepresented material facts to the AG and falsely representing that the Compromise was detrimental to the interests of the charities when she herself had agreed to it in the first place.
[157] TCS, however, argues that she was simply fulfilling her duties to the estate as a responsible and prudent executrix and trustee. She explains that she wore multiple hats when negotiating the Compromise. She participated in the negotiations not only in her personal capacity as a defendant in the suits, but also as the executrix and trustee of TKT’s estate. In the latter capacity, she had a legal duty to protect the interests of the beneficiaries under the Joint Will and a moral duty to give effect to her father’s wishes. Further, in agreeing to the Compromise, she had also had to consider NGO’s predicament and emotions because long, drawn-out litigation would be very taxing and upsetting for her aged mother. TCS further asserts that she insisted on including the Condition Precedent in order to protect herself from being exposed to suits from charities or any authorities representing charities for diverting funds away from the charitable objects of the Joint Will. She holds the belief that entering into the Compromise placed her in breach of her obligations as the executrix and trustee of TKT’s estate. She was therefore trying to protect herself from any legal repercussions by insisting that the consent of the AG, as the protector of charities, first be obtained. These reasons were also canvassed in TCS’ solicitor’s letter to the AG on 29 June 2012 (see [152(j)] above).
[158] At the outset, I will state that I consider it wholly unnecessary to look at the merits of the Compromise. Although some of the parties’ submissions rely on these merits (or the lack thereof), the merits or demerits are irrelevant to any issue which I have to determine.

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Tan Chin Hoon and others v Tan Choo Suan (in her personal capacity and as executrix of the estate of Tan Kiam Toen, deceased) and others and other matters

Laws this judgment relies on

Grounds of decision

Introduction

Dramatis personae

Procedural history

Summary of the three matters

S570: the main action

S170: the Katong Property

OS921: the Compromise

Overview of my decision

Background facts

TKT’s history

AAS

The Tan family’s shareholdings in AAS

TKT brings his children in as shareholders of AAS

The Tan family members’ involvement in AAS

(1) TCS

(2) TCG

(3) TYK

(4) TCP

(5) TCH

(6) NGO

TKT withdraws from active role in AAS

TKT transfers shares to his sons

The AAS Shares

The Bajumi Shares

Relationship between the families frays

The DBS Term Loan

Transfer of the Bajumi Shares to NGO

The 2005 Trust Deed in favour of TCS

The 2002 and 2003 AAS Shareholder Loans

EnGro and AAIE

EnGro

AAIE’s EnGro shares

TCS’s EnGro shares

The Katong Property

The Katong Property

The No 2 Account

TCS begins to exert influence and control in AAS

TKT passes away

The Hong Kong litigation

Conclusion on the background facts

OS921: the Compromise

The parties’ positions

The issues

Is there an implied duty to cooperate?

Did TCS breach the implied duty to cooperate?

TCS’s conduct

TCS did not breach the implied duty to cooperate