High Court · Decided 21 June 2012

Tjong Very Sumito and others v Chan Sing En and others

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[2012] SGHC 125Case no. Suit No 89 of 2010

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Steven Chong J:
Introduction
[1] This dispute relates to three separate agreements for the sale of shares in two Indonesian companies which ultimately own an Indonesian coal mine. The first agreement was, inter alia, for the sale of 72% of the shares in the first company to a subsidiary of a Singapore public listed company for US$18 million. The second and third agreements were for the sale of the balance shares in the two Indonesian companies to parties who were allegedly independent of the public listed company.
[2] At the heart of this case, the main dispute concerned the non-payment of the full purchase price under the first agreement. It is common ground that about US$12 million of the purchase price was not paid to the sellers. It was instead paid to entities with whom the sellers have had no dealings and who were not parties to the agreement though they were identified under the terms of the first agreement to be “authorised to receive the [purchase price] for and on behalf of the [sellers]”. However, according to the former Managing Director of the public listed company (“the MD”) and the non-parties, the latter were entitled to retain the purchase price without the need to account to the sellers. In the course of the action, the MD as well as the non-parties proffered differing, unsubstantiated and even un-pleaded reasons to justify retention of the payments. Why? One would have expected that the basis for the payments would be explicitly stipulated in the first agreement if the non-parties were indeed entitled to retain the payments.
[3] As regards the second and third agreements, the sellers claimed that the balance shares were, inter alia, sold under duress because the MD allegedly told the sellers that they would not receive the balance purchase price under the first agreement unless the balance shares were sold to his nominee for a fraction of its market value, ie, US$2 million.
[4] This case is unusual in many respects. The following is just a sampling. First, numerous documents were alleged to have been forged or fabricated by the sellers. Although the MD and the non-parties retained handwriting experts to prove the forgery, the sellers, curiously, did not. However, at the trial, the MD’s handwriting expert conceded under cross-examination that a key document in the action which the MD had denied signing was probably signed by him. Second, the public listed company admittedly made an “erroneous” announcement over SGXNet, a system hosted by the Singapore Exchange (“SGX”) that allows users such as listed companies to submit their corporate announcements. The public listed company had “erroneously” announced that the payments to the non-parties were justified on the basis that the shares were originally owned by them when, in truth, this was plainly false. This alleged “error” came to light during the injunction hearing before me when it was conceded by the MD’s counsel that the announcement was incorrect as the non-parties were never the owners of the shares. How did such an “error” occur? At the injunction hearing, it was presented as a “typographical error”. Third, on the eve of the trial, one of the sellers dramatically applied to be separately represented and for leave to discontinue the action altogether. Fourth, although the buyers under the second and third agreements claimed to be independent of the public listed company, they were not able to produce any evidence that they had paid the purchase price. Instead, the evidence suggests that the purchase price under the second and third agreements was paid by the public listed company. Finally, the non-party to the first agreement who received the bulk of the purchase price under the first agreement, ie, US$10 million comprising cash and shares, was a no-show at the trial. The writ could not even be served on him. No one could establish whether he actually received the cash payment and why he was entitled to retain the cash payment and the shares. The sellers instead claimed at the trial that the MD pocketed the balance purchase price.
[6] This case first came before me some two years ago in connection with an ex-parte mareva injunction. Adopting the approach of the English Court of Appeal in Dubai Bank v Galadari [1990] 1 Lloyd’s Rep 120, although I accepted that the sellers had established an arguable case for conspiracy and fraudulent misrepresentation, I nonetheless set aside the ex-parte injunction on account of the sellers’ inexcusable delay in applying for the injunction, which undermined their belief in the alleged risk of dissipation of assets as such risk was grounded solely on a prima facie case of conspiracy or fraud. However, due to the troubling features of the dispute, I held over the inquiry as to damages suffered by reason of the interim injunction until after the outcome of the trial. On that occasion, I observed that the agreements were “no ordinary plain vanilla transactions” and that there “is clearly something more than meets the eye”. This became clearer as the trial unfolded.
The parties
[7] The 1plaintiff, Tjong Very Sumito (“Tjong”), is an Indonesian businessman involved in businesses dealing with inter alia iron ore, coal, property, and furniture. The 2 plaintiff, Iman Haryanto (“Iman”), is Tjong’s brother, and the 3 plaintiff, Herman Aries Tintowo (“Herman”), is Tjong’s friend and co-director in an events organisation company, Venus International Productions Pte Ltd. Neither Iman nor Herman has filed any Affidavit of Evidence-in-chief (“AEIC”) in this Suit.
[8] The 1 defendant, Richard Chan Sing En (“Richard Chan”), is the former Managing Director of a Singapore public listed company, Magnus Energy Group Ltd (“MEGL”) and former director of MEGL’s wholly-owned subsidiary, Antig Investments Pte Ltd (“Antig”). Antig was incorporated on 1 June 2004, and Richard Chan was appointed its director on the same day. He resigned as Antig’s director on 15 May 2008 and left the employment of MEGL on 1 June 2008. According to Tjong, Richard Chan was introduced to him by the 5 defendant, Alwie Handoyo (“Alwie”), on a social basisin Singapore in or around 2004. Alwie had apparently told Tjong that Richard Chan was someone whom Tjong could trust and who would help Tjong make money.
[9] Alwie is an Indonesian graduate from the California State University, Fresno. He claims to be a well-connected businessman who holds shares and directorships in various Indonesian companies. He is currently a director of the company which owns the Jakarta Stock Exchange. Alwie was introduced to Tjong in the late 1990s through one Mr Abi and Pak Rahardjo (“Rahardjo”), and has known Richard Chan since about 1999 or 2000, the two having dealt with each other “in relation to the telecommunication industry”. Alwie is also the husband of the 6 defendant, Susiana Chandra (“Susiana”), who is a homemaker.
[10] The 2 defendant, Aventi Holdings Limited (“Aventi”), and the 4 defendant, Overseas Alliance Financial Limited (“OAFL”), are companies incorporated in the British Virgin Islands (“BVI”) which were identified as recipients of a large part of the purchase price under the 1 SPA (see [42] and [48] below). Both Aventi and OAFL were served with the writ of summons on 26 February 2010 at their registered office at Portcullis TrustNet Chambers (“Portcullis”) in Tortola, BVI, but neither has entered an appearance or defence. As will be discussed (see [69] to [75] below), it is not entirely clear who the ultimate owners of Aventi and OAFL are. It suffices to say for now that Alwie asserts that he is himself the controlling mind of OAFL while the 3 defendant, Johanes Widjaja (“Johanes”), is the controlling mind of Aventi.
[11] Alwie claims to have known Johanes since 2000 or 2001. To date, Johanes has not been served with the writ of summons as the plaintiffs have been unable to locate him based on his last-known residence and contact number, as provided by Alwie’s former solicitors. The plaintiffs took out a summons against Portcullis in March 2010 to compel the provision of information on Johanes. However, subsequent attempts to serve the writ on Johanes pursuant to such information have proved to be similarly futile.
[12] Finally, the 7, 8 and 9 defendants are Jake Pison Hawila (“Jake”), Advance Assets Management Ltd (“AAML”) and Edwin Sugiarto (“Edwin”) respectively. Jake and AAML (a BVI investment holding company of which Edwin is the sole shareholder-director) are the purchasers of the balance shares owned by Tjong. Jake and Edwin have, respectively, known Alwie since 2000 and 2002.
[13] In a twist of events, on 10 January 2012, shortly before the commencement of trial on 16 January 2012, Herman applied to be separately represented and for leave to discontinue his action, which was granted on 13 January 2012. All references to the plaintiffs in this Judgment insofar as events prior to 13 January 2012 shall collectively mean Tjong, Iman and Herman. However, all orders made in this Judgment in relation to the plaintiffs shall refer only to Tjong and Iman given Herman’s discontinuance of his claim.
The sale and purchase agreements
[14] The dispute concerns the execution and performance of three sets of sale and purchase agreements involving the shares of two Indonesian companies, PT Batubaraselaras Sapta (“PT Batubara”) and PT Deefu Chemical Indonesia (“PT Deefu”). PT Batubara carried on business in the coal industry in Indonesia and owns the right to mine and extract coal from the Kuaro coal formation located at Kabupatan Pasir, East Kalimantan, Indonesia. Prior to 23 November 2004, 95% of its shares were owned by PT Deefu, while the remaining 5% were held by Tjong. According to the plaintiffs, PT Deefu and Tjong had purchased those shares from PT Batubara’s original owners, one Ms Roosanawati and one Mr Happy Nugroho Priyadi (“Mr Happy”) in around August 2004.
[15] PT Deefu, which is principally an investment holding company, was set up on 5 December 2000 by Tjong and Iman. Prior to 23 November 2004, its shares were owned by Tjong, Iman and Herman, who held 72.7%, 20% and 7.3% shareholdings respectively. As Tjong’s nominees, Iman and Herman held their PT Deefu shares on trust for Tjong.
The 1 SPA
[16] On 23 November 2004, the plaintiffs and Antig entered into a Shares Sale and Purchase Agreement (“November 2004 Agreement”) under which the plaintiffs agreed to sell and Antig agreed to purchase 72% of PT Deefu shares for US$18 million. The plaintiffs signed the November 2004 Agreement in Alwie’s Jakarta office. Then followed a series of four supplemental agreements between the plaintiffs and Antig, which effected various amendments to the November 2004 Agreement. For ease of reference, the November 2004 Agreement, together with all four supplemental agreements, will be collectively referred to as “the 1 SPA”.
[17] The parties dispute over the precise circumstances surrounding the execution of the 1 SPA. According to Richard Chan, Alwie was the facilitator for the transaction under the 1 SPA, while Tjong was the principal negotiator representing the plaintiffs. Richard Chan claims that Tjong was regularly accompanied by a chauffeur, bodyguards and a personal legal counsel, one Mr Gardy Sutajie (“Gardy”) during negotiations in Jakarta, which were conducted in a mix of Bahasa Indonesia, English and Mandarin. Gardy states in his AEIC that he had indeed been present at several meetings attended by Tjong, Rahardjo, Richard Chan and Alwie in Jakarta. He agreed in cross-examination that he is not a qualified lawyer. It is Richard Chan’s case that Tjong understood what was going on at all times and never objected to the use of English during these meetings. This was vigorously challenged by Tjong, who claims to be unable to fully understand documents in English or to carry on a full conversation in English.
[18] I shall first provide an overview of the cause and effect of each of these four supplemental agreements based on the different versions of events asserted by each of the relevant parties.
The supplemental agreements
[19] The first supplemental agreement dated 3 January 2005 (“the 1 Supplemental”) gave Antig more time to complete the necessary due diligence and provided that, out of the completion payment under the November 2004 Agreement, MEGL was to pay Tjong US$300,000 in advance, upon the execution of the 1 Supplemental. According to Richard Chan and Alwie, the 1 Supplemental was entered into on the plaintiffs’ request for the advance payment. According to Tjong, however, it was MEGL which initiated negotiations for the 1 Supplemental as it wanted more time to complete its due diligence.
[20] The second supplemental agreement dated 18 February 2005 (“the 2 Supplemental”) was executed to clarify the extent of the plaintiffs’ shareholding in PT Deefu which, according to Tjong, had been incorrectly stated in the November 2004 Agreement. Richard Chan and Alwie however assert that the 2 Supplemental came about when Antig discovered that the plaintiffs had breached their previous representations made in the November 2004 Agreement by increasing PT Deefu’s share capital after the execution of the 1 Supplemental. Antig thus demanded that the plaintiffs provide certain additional warranties and representations before Antig would agree to continue with the transaction.
[21] The third supplemental agreement dated 19 July 2005 (“the 3 Supplemental”) placed a US$2 million cap on the amount of advance loans to be disbursed by Antig to the plaintiffs pending completion. Richard Chan asserts that this was prompted by Tjong’s frequent demands for advance loans, allegedly required for various licences and technical issues relating to the coal mine. Tjong claims, however, that the 3 Supplemental reflected an agreement that Antig would pay US$2 million of the purchase price immediately in order to placate Tjong, who had apparently wanted to cancel the transaction which was taking too long to complete .
[22] The fourth supplemental agreement dated 19 August 2005 (“the 4 Supplemental”) is the most critical supplemental agreement in that it clarifies the payment terms of the purchase consideration under the November 2004 Agreement. For ease of comparison, I shall set out both the original and amended payment terms.
[23] The original payment terms under clause 4.02(2) of the November 2004 Agreement (“the original Clause 4.02(2)”) provided that:
Pursuant to clause 2.2 of the 4 Supplemental, the plaintiffs and Antig agreed to delete the original Clause 4.02(2) of the November 2004 Agreement in its entirety and replace it with the following new clause (“Clause 4.02(2)”):
[24] In essence, the effect of Clause 4.02(2) was that, out of the total purchase price of US$18 million, US$6 million was to be paid in cash to Tjong and the balance US$12 million was to be paid to Aventi and OAFL, who were authorised to receive the same “for and on behalf of” the plaintiffs. Of the US$12 million to be paid to Aventi and OAFL, US$5.75 million was to be paid in the form of new allotments of MEGL shares with the balance payable in cash. I shall use the term “the Shares Component” to denote the US$5.75 million payable in the form of allotments of MEGL shares. The remaining US$12.25 million payable in cash shall be referred to as “the Cash Component”. To date, the plaintiffs have only received US$5,528,772. They have consequently brought a multitude of claims against Richard Chan, Aventi, Johanes, OAFL, Alwie and Susiana to recover the balance purchase consideration by way of the cash payments and the share allotments.
[25] Despite the critical importance of the 4 Supplemental, the AEICs of Tjong, Richard Chan and Alwie contained scant details of the events prompting its execution. It was Richard Chan’s pleaded position that the four supplemental agreements, and in particular, the 4 Supplemental, were made on the plaintiffs’ instructions. This contradicted Tjong’s case that he did not understand what he was signing as the 4 Supplemental was drafted in English and Tjong did not read it. Richard Chan later hedged his position, saying that Tjong had been “agreeable” to the amendments, before finally conceding that it was not Tjong, but himself, who had instructed the lawyers to have the phrase “for and on behalf of the vendors” included in the 1 SPA, purportedly because SGX was not agreeable to the number of MEGL shares being issued to Aventi and OAFL. Richard Chan acknowledged under cross-examination that the plaintiffs signed the 4 Supplemental on his representation that it was a SGX requirement.
[26] At first sight, it may appear curious that the plaintiffs are seeking to challenge the 4 Supplemental which, on its face, supports their case that Aventi and OAFL were not entitled to beneficially retain the payments. It has, however, been the consistent position of the plaintiffs that they had signed all the documents on Richard Chan’s instructions without fully understanding their terms and effect. It is at least clear that the inclusion of Aventi and OAFL in the 1 SPA was not on the instructions of the plaintiffs. Richard Chan testified that Aventi and OAFL were inserted in the 1 SPA after negotiating with Alwie, Johanes and Tjong. This contradicted his earlier testimony that throughout the transaction he did not speak to Johanes in relation to the 1 SPA. Whatever may be the reason behind the insertion of Aventi and OAFL in the 1 SPA and the execution of the 4 Supplemental, the undeniable fact remains that it was executed on those terms and I shall accordingly determine the plaintiffs’ claims based on a construction of Clause 4.02(2), which will be analysed in more detail at [96] – [104] below. As will be apparent below at [106] – [119], there is a considerable body of objective evidence to substantiate my construction of Clause 4.02(2).
The 2 and 3 SPAs
[27] The claims brought against Jake, AAML and Edwin relate to two further Share Sale Agreements entered into on 12 July 2007. Under the second Share Sale Agreement, Tjong agreed to sell, and Jake agreed to purchase the remaining 5% of PT Batubara shares at a price of US$320,000 (“the 2 SPA”). Pursuant to the third Share Sale Agreement, Tjong agreed to sell and AAML agreed to purchase the remaining 28% of PT Deefu shares at a price of US$1.68 million (“the 3 SPA”). When discussed collectively, the shares sold under the 2 and 3 SPAs will be referred to as “the Remaining Shares”.
[28] According to Richard Chan, the 2 and 3 SPAs came about on Tjong’s initiative. Tjong had apparently approached Richard Chan for a US$2 million loan in March 2007 secured by a pledge on the Remaining Shares. When Richard Chan told Tjong that MEGL was unable to provide the loan, Tjong then suggested that MEGL purchase the Remaining Shares. However, MEGL already had a majority share of PT Deefu and claims that it had no desire to increase its shareholding through Antig. Nonetheless, Richard Chan offered to help Tjong by asking Alwie to source for potential buyers. Richard Chan claims that he only found out later that Alwie had managed to find Jake – whom Richard Chan did not know personally – and AAML to acquire the Remaining Shares.
[29] Jake and Edwin confirm that they had never met Richard Chan prior to these proceedings, and that it was Alwie who had approached them regarding the sale of the Remaining Shares in early 2007. Both claim that they had left Alwie to make the necessary arrangements for the transactions and that Alwie was the only person amongst the defendants whom they had dealt with.
[30] In early 2008, just a couple of months after the acquisition of the Remaining Shares under the 2 and 3 SPAs, Jake and Edwin entered into share swap agreements with an Australian listed company, APAC Coal Limited (“APAC”), pursuant to which they swapped the Remaining Shares for a total of 63.2 million APAC shares. At that time, the APAC shares were valued at A$0.20 per share. Effectively, Jake and Edwin (through AAML) resold the Remaining Shares, which they bought for only US$2 million, at a value of A$12.64 million.
Procedural history
[31] This case has had a somewhat tortuous history. As some features of the previous proceedings bear on the present case, I shall outline them briefly, insofar as they are relevant.
The Antig Suit
[32] According to Tjong, Richard Chan became uncontactable sometime after 12 November 2007, and attempts to reach him on his phone and at the MEGL offices all came to naught. It then dawned on Tjong that Richard Chan, MEGL and Antig had never intended the plaintiffs to be paid the balance purchase price. Following this realisation, Tjong instructed his solicitors to recover the balance of approximately US$12 million. His immediate concern at that time was to stop the next payment of US$3.7 million due to Aventi under the 1 SPA on 13 June 2008. The plaintiffs’ solicitors thus wrote to Antig in April 2008 demanding that the US$3.7 million be paid directly to the plaintiffs. When no response was elicited from Antig despite the sending of numerous demand letters, the plaintiffs commenced the Antig Suit against Antig in May 2008. The Antig Suit was however stayed in favour of arbitration pursuant to an arbitration clause contained in the 1 SPA (see Tjong Very Sumito and others v Antig Investments Pte Ltd [2009] 4 SLR(R) 732).
[33] Significantly, it transpired in the course of the Antig Suit that the US$3.7 million had already been paid out in November 2007 pursuant to an agreement between Antig and Aventi for Antig to effect early payment to Aventi at a discount. Tjong claims that he never knew, and had not authorised, such early payment. The identity of the beneficial recipient of this US$3.7 million is disputed, and will be discussed at [45] to [47] below.
The Mareva proceedings
[34] The present proceedings were brought against the 1 to 9 defendants on 8 February 2010 for the balance purchase price of US$12,471,227, being the difference between the full purchase price of US$18 million and the US$5,528,772 the plaintiffs have thus far received (a difference of US$1 arises due to the rounding down of the two sums). On the same day, the plaintiffs applied for a Mareva injunction prohibiting the defendants from dealing with their assets worldwide. I granted the ex-parte injunction on 11 February 2010 on the basis that there was a real risk of dissipation of the defendants’ assets in Singapore, and on the plaintiffs’ undertaking as to damages suffered as a result of the interim injunction. I placed weight on the fact that despite several letters sent to Antig directing it not to make the payments to Aventi and OAFL, Antig had ignored the instructions, accelerated the payments and purportedly paid the bulk of the purchase price to Aventi and OAFL.
[35] Subsequently, Richard Chan, Alwie, Susiana, Jake, AAML and Edwin applied to set aside the injunction order. I heard the parties and eventually discharged the injunction on 17 March 2010 on the ground of the plaintiffs’ inexcusable delay in applying for the injunction. As mentioned (at [6] above), I was of the view that the delay demonstrated that the plaintiffs did not have a genuine belief that the defendants would dissipate their assets to defeat the judgment. Also, if there had been such a risk, the defendants’ assets would by then have been dissipated. Various affidavits filed by the parties in connection with these Mareva injunction proceedings were relied on by the parties in the course of the trial.
The plaintiffs’ application for judgment in default against Aventi and OAFL
[36] Subsequently, on 22 April 2010, the plaintiffs took out two summonses seeking judgment in default of defence against Aventi and OAFL. These were disallowed by the Assistant Registrar who was not satisfied that the claims against Aventi and OAFL were truly severable against, and/or independent of, the claims against Johanes and Alwie, bearing in mind inter alia the fact that the plaintiffs were seeking to lift the corporate veil against Aventi and OAFL.
Stay of present proceedings against MEGL and Antig
[37] In August 2010, MEGL and Antig were added as the 10 and 11 defendants by way of an amendment to the plaintiffs’ writ of summons following the discharge of the injunction during which certain observations were made about the false SGXNet announcement issued by MEGL. They responded by applying for a stay in favour of arbitration brought by MEGL and Antig against the plaintiffs, which they obtained on 23 November 2010. Subsequent to the stay, the plaintiffs have since discontinued the proceedings against MEGL and Antig. As such, while numerous references to MEGL and Antig remain in the pleadings, this Court will not be making any order against MEGL or Antig in the present proceedings.
[38] By way of a joint statement filed by Tjong, Iman and Richard Chan on 9 April 2012 after the trial, the Court was informed that parties to the arbitration have served their statements of claim and defence, and the matter has been fixed for hearing by the arbitral tribunal in January 2013. The joint statement confirms that the arbitral tribunal, which was set up on 21 September 2011, is aware of the general nature of the present proceedings, and that Jake, AAML and Edwin (who discontinued their counterclaim in the present proceedings against the plaintiffs for rescission of the 2 and 3 SPAs, on the ground that Tjong had misrepresented to Jake and AAML that he was the sole beneficial owner of the Remaining Shares) have agreed to abide by the decision of the arbitral tribunal as regards the plaintiffs’ title to the PT Deefu and PT Batubara shares.
[39] During the course of the trial, I indicated on a number of occasions that the absence of MEGL and Antig to the proceedings was highly unsatisfactory because the central issue of the arbitration concerns PT Deefu’s title to the PT Batubara shares at the material time; a finding by the arbitral tribunal that the plaintiffs and PT Deefu never had title to the PT Batubara shares could potentially render the present proceedings nugatory. Despite this, the parties opted not to apply for a stay pending the outcome of the arbitration.
[40] Although the issue relating to the plaintiffs’ title to the PT Deefu shares was raised in Richard Chan’s Defence filed in March 2010, it was only after the conclusion of the trial that his counsel, Mr Nicholas Narayanan (“Mr Narayanan”) belatedly suggested that the trial should be stayed pending the outcome of the arbitration. I rejected the application given that the trial had by then run its full course. I note, further, that no evidence was produced at the trial to support the allegations that PT Deefu and Tjong did not own the PT Batubara shares at the material time. Instead, the evidence appears to point in the opposite direction. First, the plaintiffs have produced a July 2007 settlement agreement under which Tjong paid US$300,000 to settle a judgment debt arising from a November 2005 Indonesian judgment ordering him to pay US$945,000 to Ms Roosanawati and Mr Happy for the purchase of the PT Batubara shares. That this payment of US$300,000 was indeed made by Antig on 25 June 2007 on Tjong’s behalf is evidenced by a statement of account produced by Tjong and confirmed by Richard Chan. Second, by clause 8.01 of the November 2004 Agreement, the plaintiffs warranted to Antig that they owned and had full right, power and authority to deal with the PT Deefu shares. The plaintiffs were obliged, under clause 5.01 of the November 2004 Agreement, read with clause 2.2(5) of the 2 Supplemental, to provide Antig with PT Deefu’s share register showing that the plaintiffs owned the relevant PT Deefu shares. These documents must have been provided to Antig’s satisfaction otherwise completion of the 1 SPA would not have taken place. As will be discussed (see [212] below), Tjong had withheld from Antig documents which he was obliged to produce under the 1 SPA, in order to extract a guarantee from Richard Chan. The evidence suggests that the documents were released following the provision of such a guarantee in late 2006.
The plaintiffs’ claims
[41] The plaintiffs have brought a complex web of claims against the defendants based on various related causes of action and interlocking facts. The claims against Richard Chan, Aventi, Johanes, OAFL, Alwie and Susiana are based on facts arising in relation to the 1 SPA, and those brought against Jake, AAML and Edwin together with Richard Chan concern the 2 and 3 SPAs. The common link between the two sets of claims is Richard Chan. I shall first set out in the neatest possible manner the various claims brought against each defendant, the underlying causes of action and the discrete subject matter they relate to. But before doing so, I should say that it is quite unsatisfactory that the plaintiffs’ claims for resulting trust and/or constructive trust/knowing receipt and/or money had and received and/or conversion were pleaded in the same breath as alternatives based on essentially the same factual matrix. No effort was made in the plaintiffs’ written closing submissions to distinguish between each of the distinct causes of action and how the facts satisfy the different ingredients of each cause of action. Further, some claims, though pleaded, were without explanation not featured at all in the plaintiffs’ written closing submissions. At a hearing on 29 May 2012, which was called at my request, counsel for the plaintiffs, Mr Peter Gabriel (“Mr Gabriel”), confirmed that the plaintiffs are not pursuing the constructive trust/knowing receipt claims against all of the defendants as well as the undue influence claim against Jake, AAML and Edwin in respect of the 2 and 3 SPAs.
Claims relating to the 1 SPA
Alleged discrete sums wrongfully paid out
(i) Aventi and Johanes: US$5.7 million and 124,856,364 MEGL shares
[42] The plaintiffs claim that there was no legitimate reason for the payment of US$5.7 million and allotment of 124,856,364 MEGL shares to Aventi, and that the payment and allotment were not intended to be gifts. The plaintiffs claim that Aventi therefore holds the US$5.7 million and 124,856,364 MEGL shares on resulting trust for the plaintiffs’ benefit. The plaintiffs advanced two further claims in the alternative, viz, (a) Aventi must return the US$5.7 million to the plaintiffs as money had and received; and (b) Aventi has converted the 124,856,364 MEGL shares for its own use and is thus liable to pay damages. These claims relating to the US$5.7 million and 124,856,364 MEGL shares will be dealt with at [77] to [184] below.
[43] The plaintiffs argue, further, that Johanes should be made personally liable based on all three causes of action against Aventi, ie, the corporate veil of Aventi should be pierced. However, the writ has not been served on Johanes, the effect of which will be discussed at [75] below.
[44] Based on the documentary evidence, I accept that 124,856,364 MEGL shares had indeed been allotted to Aventi. There is, for instance, a letter dated 22 June 2006 written by Antig confirming that 124,856,364 MEGL shares were to be allotted and issued to Aventi’s nominee. MEGL has also made an announcement to SGX on 23 June 2006 confirming that it had issued a total of 166,959,091 MEGL shares to Aventi and OAFL. There is also evidence (see [166] below) that Aventi/Johanes have sold at least 100 million MEGL shares.
[45] The evidence however does not show that Aventi has received the payment of US$5.7 million, which was purportedly made without the plaintiffs’ knowledge by way of two advance payments – US$1.88 million, representing the discounted value of US$2 million on 20 July 2006 and US$3,492,800 representing the discounted value of US$3.7 million on 7 November 2007. The documents only show that the two discounted payments had probably been paid to a Credit Agricole (Suisse) S.A. (“Credit Agricole”) account. There is, for instance, a 20 July 2006 letter purportedly written by Johanes on behalf of Aventi instructing Richard Chan to draw up a cheque for US$1.88 million in favour of “Credit Agricole (Suisse) S.A.”. This letter is stamped “Paid”, indicating that the sum had been paid as instructed to the Credit Agricole account. The beneficiary of this account is however unknown. While Richard Chan claims that Johanes was the beneficiary, he was only able to point to the 20 July 2006 instructions from Johanes as the basis for his assertion. Further, payment even if made to Johanes is not necessarily payment to Aventi as stipulated in Clause 4.02(2). Just to be clear, my finding is that there is no evidence of actual receipt of the US$5.7 million by Aventi. This is separate and distinct from the inquiry as to whether Antig had paid out US$5.7 million to Credit Agricole or to any other party.
[46] There is also no evidence that the second advance payment of US$3.7 million was actually made to Aventi. Although there is a statement by MEGL to SGX on 13 November 2007 stating that, in return for a discount of 5.6%, Antig has acceded to Aventi’s request for another early settlement of the US$3.7 million payment, there is nothing to show who the payment was actually made to. Under cross-examination, Richard Chan was only able to state that the discounted US$3.7 million was “maybe” paid into the Credit Agricole account. In light of this, I am not able to conclude that Aventi received the payment of US$5.7 million out of the purchase price due under the 1 SPA.
[47] I note that the plaintiffs’ case has now morphed into something quite different from their pleaded case. They now argue that the US$5.7 million was paid to Richard Chan, who is the (alleged) beneficiary of the Credit Agricole account. This is a significant departure from their pleaded case, viz, that Aventi received the US$5.7 million and is liable to return it. At the same time, the plaintiffs still maintain their claim of US$5.7 million against Aventi in their written closing submissions. Such conflicting submissions are the result of the plaintiffs’ unfortunate failure to address their mind to the impact of their alternative and conflicting claims. In any event, they have not produced evidence showing that Richard Chan is the owner of the Credit Agricole account. This finding may be of some relevance to the arbitration proceedings against Antig and MEGL, but for now I am unable to make any order against Aventi in respect of the US$5.7 million payment given the evidence, which is in line with the plaintiffs’ alternative submissions, that Aventi did not receive the US$5.7 million.
(ii) OAFL and Alwie: US$550,000 and 42,102,727 MEGL shares
[48] The claims brought against OAFL and Alwie mirror those brought against Aventi and Johanes. The plaintiffs claim that there was no legitimate reason for the payment of US$550,000 and the allotment of 42,102,727 MEGL shares to OAFL, and that the payment and allotment were not intended to be gifts. The plaintiffs claim that OAFL therefore holds the sum of US$550,000 and 42,102,727 MEGL shares on resulting trust for the plaintiffs’ benefit. Alternatively, the plaintiffs claim that OAFL is liable to (a) return the sum of US$550,000 to the plaintiffs as money had and received, and (b) pay the plaintiffs damages for its conversion of the 42,102,727 MEGL shares. The plaintiffs argue that Alwie should be personally liable based on all three causes of action via the lifting of OAFL’s corporate veil (see [69] to [74] below).
[49] I find that the sum of US$550,000 has been paid to and received by OAFL. I also find that the 42,102,727 MEGL shares have indeed been allotted to OAFL. In relation to the shares, there is, first, a letter from Antig to the plaintiffs dated 22 June 2006 confirming that 42,102,727 MEGL shares were to be issued to OAFL’s nominee. Secondly, the MEGL announcement mentioned at [44] above confirmed that MEGL had issued 166,959,091 MEGL shares to Aventi and OAFL. Finally, the allotment was also admitted by Alwie.
[50] In relation to the US$550,000, Alwie has produced OAFL’s Coutts Bank account statements, which reflect the receipt of US$500,000 by OAFL in two tranches – US$93,396.62 (S$200,000) on 26 January 2006 and US$406,603.38 (S$647,524.01) on 16 June 2006. According to the statements, these cheque payments were made by MEGL and MEGL’s predecessor company, Strike Engineering Ltd. The plaintiffs have also produced a 23 November 2004 letter by Alwie instructing Antig to pay US$50,000 into Alwie’s Citibank account. Alwie admits that this payment of US$50,000 was made to his personal bank account, apparently because OAFL’s account was yet to be opened at that time.
(iii) Susiana: US$157,525
[51] The plaintiffs allege that Susiana had received US$157,525 rightfully due to the plaintiffs under the 1 SPA. They seek to make her liable to account for the payment as resulting trustee. They claim that Susiana was used as a “front” to receive money for Alwie and had facilitated in dissipating the US$157,525 without a trace. Alternatively, they seek to recover the sum based on money had and received. The fact of receipt of US$157,525 by Susiana is admitted by Alwie and Susiana. Alwie claims that this sum represented (a) payment of the remaining portion of a commission due to him for brokering the sale of the shares to Antig (US$130,000) and (b) repayment on a personal loan of 250 million rupiah extended to Tjong (approximately US$27,525). Susiana adopts the same position as Alwie. The claims against Susiana will be examined at [78] to [157] below.
(iv) Richard Chan and Alwie: S$334,429.20
[52] The plaintiffs claim that Richard Chan and/or Alwie had received S$334,429.20 (US$210,000) rightfully due to the plaintiffs under the 1 SPA, and are liable to account for the payment as resulting trustees. Alternatively, they seek to recover the payment of S$334,429.20 based on the principle of money had and received. As will be discussed (see [90] below), the evidence shows that the payment of S$334,429.20 was beneficially received by Alwie, and not Richard Chan, via a cheque paid into a Coutts Bank account.
Balance purchase price of US$12,471,227
[53] The plaintiffs have also brought claims to recover the entire balance purchase price of US$12,471,227. First, they claim that Richard Chan and Alwie had made a series of false and fraudulent representations to Tjong, which the plaintiffs relied on to their detriment, specifically, by failing to challenge the 1 SPA terms, by allowing Richard Chan to continue to handle payment matters under the 1 SPA, and by entering into the four supplemental agreements, resulting in the loss of the balance purchase price. They rely on Section 2(1) of the Misrepresentation Act (Cap. 290) in the alternative. These misrepresentation claims will be examined at [185] to [205] below.
[54] Secondly, the plaintiffs have sued Richard Chan on a written guarantee (“the guarantee”) purportedly executed by him in favour of Tjong for the full purchase price of US$18 million. As the plaintiffs have to-date received only US$5,528,772, they claim that the guarantee has been breached and seek recovery of the balance US$12,471,227, or alternatively, the sum of US$6,721,227 and the market value of 166,959,091 MEGL shares (see [211] to [264] below).
[55] Thirdly, the plaintiffs claim that Richard Chan, Aventi, Johanes, OAFL, Alwie, Susiana and/or MEGL had conspired to induce the plaintiffs to, inter alia, enter into the 1 SPA by making a series of fraudulent misrepresentations, causing them loss and damage amounting to the balance purchase price of US$12,471,227 (see [206] to [210]).
Claims relating to the 2 and 3 SPAs
Avoidance of 2 and 3 SPAs based on allegation of duress
[56] Tjong seeks to avoid the 2 and 3 SPAs on the ground that he had executed them under duress from Richard Chan. By reason of this, he also seeks to hold Jake, AAML and Edwin liable, arguing that they have been unjustly enriched under the 2 and 3 SPAs and are liable for the losses he sustained as a result of entering into the 2 and 3 SPAs.
Claims for damages based on allegation of fraudulent misrepresentation
[57] Tjong claims that he was induced to enter into the 2 and 3 SPAs because Richard Chan had fraudulently misrepresented to him that he would, in return, make payment of, or ensure that the plaintiffs would be paid, the balance purchase price under the 1 SPA. Tjong claims that Richard Chan is therefore liable for his losses, being the undervalue of the Remaining Shares under the 2 and 3 SPAs. This claim is examined at [310] to [319] below.
Unlawful means conspiracy involving Richard Chan, MEGL, Antig and/or Jake
[58] Tjong further alleged that Richard Chan, MEGL, Antig and/or Jake conspired to induce Tjong, via duress and/or fraudulent misrepresentation perpetrated by Richard Chan, to sell his remaining 5% PT Batubara shares at an undervalue under the 2 SPA. Although allegations of undue influence were also pleaded in the plaintiffs’ statement of claim, Mr Gabriel confirmed at the 29 May 2012 hearing that the plaintiffs are no longer pursuing them.
Unlawful means conspiracy involving Richard Chan, MEGL, Antig, AAML and/or Edwin
[59] Similarly, Tjong claims that, pursuant to a conspiracy between Richard Chan, MEGL, Antig, AAML and/or Edwin, he had been induced, via duress and/or fraudulent misrepresentation perpetrated by Richard Chan, to sell his remaining 28% PT Deefu shares at an undervalue under the 3 SPA. This claim is examined at [320] below.
Tjong’s standing to sue
[60] Given Iman’s absence as a witness from the trial and the discontinuance of Herman’s action (see [13] above), a preliminary issue arises as to whether Tjong has the standing to sue in relation to the PT Deefu shares owned by Iman and Herman. I find that he does.
[61] It is the plaintiffs’ case that Iman and Herman were Tjong’s nominees who held their PT Deefu shares on trust for Tjong. Tjong has produced two Powers of Attorney executed by Iman and Herman in his favour. The first, which is dated 27 September 2010 and executed by Iman, authorises Tjong to “receive money from the sale of 110 (one hundred ten) shares in PT Deefu”. It also states that the shares “are actually owned by [Tjong]”. The second Power of Attorney, which is dated 21 June 2010 and executed by Herman, goes further by authorising Tjong to “[f]ile a lawsuit in court of Jakarta and Singapore against Richard Chan, [MEGL]/[Antig], [Aventi], Johanes Widjaja, [OAFL], Alwie Handoyo, Susiana Chandra, Jake Pison Hawila, [AAML], Edwin Sugiarto and others”.
[62] It is also significant that under Clause 4.02(2), only Tjong (and not Iman or Herman) was specifically identified to receive the payments. In fact, for every payment, only Tjong was required to sign the payment instruction. Further, the guarantee provided by Richard Chan acknowledges that Tjong alone is entitled to the full purchase price. As explained in [108] below, Alwie also signed a letter dated 15 June 2006 in which he expressly acknowledged that he “will return the monies and shares received from [MEGL], and [Antig], to Tjong”. Clearly, Antig, Richard Chan and even Alwie recognise that Tjong is entitled to receive the full purchase price because all of the PT Deefu shares were indeed beneficially owned by him.
[63] Counsel for Alwie and Susiana, Mr Murugaiyan Sivakumar Vivekanandan (“Mr Murugaiyan”), however argues that Iman’s action should be dismissed pursuant to Order 35 rule 1(2) of the Rules of Court (Cap 322, R5, 2006 Rev Ed) (“ROC”) because of his absence at trial, which has deprived the defendants of their right to cross-examine him. Relying on Performing Right Society Ltd v London Theatre of Varieties Ltd [1924] AC 1 (“Performing Right Society”), Mr Murugaiyan argues that following the dismissal of Iman’s action, Tjong cannot maintain any claim in relation to Iman’s shares. The relevant passage by Lord Cave LC in Performing Right Society (at p 14) reads:
Simply put, in order to obtain final judgment, an equitable owner must either perfect his title by taking an assignment from the legal owner or, alternatively, by joining the legal owner because of the risk that the defendant will be exposed to a second claim by, eg, a bona fide purchaser for value without notice claiming under the legal owner (Alliance Entertainment Singapore Pte Ltd v Sim Kay Teck and another [2007] 2 SLR(R) 869 at [63]). Mr Murugaiyan argues that, for this same reason, Tjong has no standing to sue in relation to Herman’s PT Deefu shares following the discontinuance of Herman’s action.
[64] I reject these submissions. Order 35 rule 1(2) of the ROC does not require the court to dismiss Iman’s claim. Consequently, since Iman remains a co-plaintiff in this Suit, Performing Right Society does not impeach Tjong’s standing to sue in relation to his shares. Performing Right Society also does not impeach Tjong’s standing to sue in relation to Herman’s shares since the 21 June 2010 Power of Attorney in Tjong’s favour eliminates the risk of multiple proceedings which concerned Lord Cave LC in Performing Right Society; by reason of his Power of Attorney, which expressly conferred authority on Tjong to bring the action against the defendants on Herman’s behalf, Herman would be bound by the outcome of this Suit (Yongnam Development Pte Ltd v Somerset Development Pte Ltd [2004] SGCA 35 at [40] – [43]).
Lifting of the corporate veil
The law
[66] As the plaintiffs are seeking to lift the corporate veils of Aventi and OAFL in order to make Johanes and Alwie liable, it is perhaps useful to deal with this issue upfront. The lifting of a company’s veil of incorporation involves difficult policy issues – while it is trite that a company is a separate legal entity from its shareholders and controllers (Saloman v Saloman [1897] AC 22), there is also the concern that company directors should not be allowed to escape personal liability for wrongs personally committed simply because those wrongs were perpetrated in their capacity as company directors (TV Media Pte Ltd v De Cruz Andrea Heidi and another appeal [2004] 3 SLR(R) 543 (“TV Media”) at [144]).
[67] Courts will, in exceptional cases, be willing to pierce the corporate veil to impose personal liability on the company’s controllers. While there is as yet no single test to determine whether the corporate veil should be pierced in any particular case, there are, in general, two justifications for doing so at common law – first, where the evidence shows that the company is not in fact a separate entity; and second, where the corporate form has been abused to further an improper purpose (Walter Woon on Company Law (Tan Cheng Han, SC gen ed) (Sweet & Maxwell, Rev 3Ed, 2009) (“Walter Woon”) at para 2.51 – 2.52, 2.57).
[68] One instance where courts would pierce the corporate veil is where the controller of a company uses the company as an extension of himself and makes no distinction between its business and his own, eg, in TV Media, where the overwhelming personal involvement of the director and principal shareholder (Semon) in the negligence of the company (Health Biz) had been “not merely very great”, but “total” (TV Media at [140]). The plaintiff in TV Media claimed that Health Biz had negligently imported and sold a slimming drug containing undeclared substances, which caused her to suffer liver damage. Having established that Semon had absolute control of Health Biz, and had been the person making all the important company decisions, the Court of Appeal concluded that he was the only person in the position to direct, authorise and/or procure Health Biz’s negligence (TV Media at [132] – [140]). On totality, Semon’s level of involvement in Health Biz indicated that he was clearly its controlling mind and spirit, which justified the lifting of Health Biz’s corporate veil against him (TV Media at [145]).
OAFL
[69] It is the plaintiffs’ pleaded case that the corporate veils of Aventi and OAFL should be lifted in order to make Johanes and Alwie personally liable for the claims brought against Aventi and OAFL respectively (see [43] and [48] above), though they are merely “given to understand”, and do not claim to have any personal knowledge as to whether Aventi and OAFL are indeed controlled by Johanes and Alwie.
[70] The plaintiffs argue that OAFL’s corporate veil should be pierced because inter alia Alwie was OAFL’s alter ego, which was used to receive the payments and the MEGL shares under the 1 SPA. I find that the facts justify the piercing of OAFL’s corporate veil on this ground. Alwie admits that he is the controller of OAFL. Although that alone would not move the court to intervene, given that parties are entitled to protect themselves by creating companies even if these are effectively one man companies (see, for example, Sitt Tatt Bhd v Goh Tai Hock [2009] 2 SLR 44 (“Sitt Tatt”) at [79], NEC Asia Pte Ltd (now known as NEW Asia Pacific Pte Ltd) v Picket & Rail Asia Pacific Pte Ltd and others [2011] 2 SLR 565 (“NEC Asia”) at [36]), the evidence shows that OAFL had been used by Alwie as an extension of himself and that Alwie’s involvement in procuring the payments to OAFL under the 1 SPA had been substantial.
[71] First, apart from the fact that Alwie had absolute control of OAFL, the paper trail shows that payments purportedly made under the 1 SPA to OAFL’s Coutts Bank account had in fact been beneficially received by Alwie (see [52] above and [90] below). This was, notably, a fact undisputed by Alwie, who also admitted that this Coutts Bank account had been used interchangeably for his other “personal purposes”. Alwie himself underscored the inter-changeability between himself and OAFL – when asked why he claimed to be entitled to retain the payments he received from Antig, he answered “I am authorised...to receive the money” under the 1 SPA. But while OAFL was a named recipient of the payments, no reference was made to Alwie in the 1 SPA.
[72] Second, in two misleading SGXNet announcements made on 14 October 2005 and 26 March 2010, MEGL had sought to justify the payments made to OAFL on the basis that Alwie (not OAFL) was a creditor of the plaintiffs (see [117] and [190] below). In line with this, Alwie has also concocted several fallacious allegations to justify his position as Tjong’s creditor (see [90] to [91] and [99] to [101] below).
[73] Third, I find it telling that OAFL has not filed an independent defence (it has been struck off the BVI Registry since 1 May 2008), and that Alwie had throughout the proceedings been acting as OAFL’s mouthpiece in asserting that OAFL was entitled to retain the payments it received under the 1 SPA. On the totality of the evidence, it is clear that Alwie was the alter ego of OAFL, which on Alwie’s own admission had been specifically incorporated for the purpose of the 1 SPA. I also note that the extent of his involvement in the procurement of payments to OAFL had been overwhelming. By his own admission, he was principally involved in the negotiations regarding the 1 SPA pursuant to which certain payments were to be made to OAFL for and on behalf of the plaintiffs. I therefore see no reason why OAFL’s corporate veil should not be lifted to make Alwie liable if a case has indeed been made out against OAFL.
[74] At trial, however, the plaintiffs attempted to suggest a positive case that Richard Chan is the owner and controlling mind of Aventi and OAFL. Their pleadings, which merely stated that Tjong understood from Richard Chan that Aventi and OAFL belonged to him, did not contain a positive assertion that he was in fact the owner of Aventi and OAFL. Indeed, in their pleaded case against Aventi and OAFL, the plaintiffs have only sought to hold Johanes and Alwie (not Richard Chan) liable for the claims against Aventi and OAFL. Further, no submissions were made by the parties in their respective written closing submissions as to whether Richard Chan was the owner of Aventi and OAFL. As such, I shall refrain from making any finding on this issue in the present proceedings since it does not arise from the pleadings.
Aventi
[75] The situation is a little more complex in the case of Aventi and Johanes. Although Alwie stated that Johanes was effectively the controlling mind of Aventi, Johanes is not strictly before this Court since he has not been served (see [11] above). As the plaintiffs have not successfully invoked this Court’s in personam jurisdiction over Johanes, this Court cannot make any order against him personally (s 16 of the Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed), Consistel Pte Ltd and another v Farooq Nasir and another [2009] 3 SLR(R) 665 at [23] – [24], [33]). The lifting of the corporate veil in the case of Aventi is therefore moot. However, Aventi has been validly served and orders can be made against it if the case is made out.
AAML
[76] The plaintiffs also seek the piercing of AAML’s corporate veil to make Edwin personally liable for the claims against AAML. Again, although Edwin admits to being the sole director-shareholder and controller of AAML, mere evidence of sole shareholding and control does not justify the piercing of AAML’s corporate veil (Sitt Tatt at [79], NEC Asia at [36]). Aside from asserting that AAML’s corporate veil should be pierced, the plaintiffs have neither pleaded the grounds on which this should be done, nor provided evidence justifying such exceptional grounds. I am thus not persuaded that AAML’s corporate veil should be pierced vis-a-vis Edwin.
Claims against Richard Chan, Aventi, Johanes, OAFL, Alwie and Susiana
[77] As mentioned (at [42] to [55] above), the plaintiffs have brought a multitude of alternative causes of action against the above defendants based on essentially the same factual matrix. I shall examine each in turn commencing with the claim for money had and received.
Money Had and Received
[78] The plaintiffs claim that the following defendants have received from Antig the various sums listed below, and seek to recover them as money had and received:
(a) As against Richard Chan and/or Alwie, the sum of $334,429.20, which was part of the US$6 million to be directly received by the plaintiffs under Clause 4.02(2);
(b) As against Aventi, the sum of US$5.7 million, which was to be received by Aventi for and on behalf of the plaintiffs under Clause 4.02(2);
(c) As against OAFL and/or Alwie, the sum of US$550,000, which was to be received by OAFL for and on behalf of the plaintiffs under Clause 4.02(2); and
(d) As against Susiana, the sum of US$157,525, which was part of the US$6 million to be directly received by the plaintiffs under Clause 4.02(2).
As explained (at [45] above), the plaintiffs have not proved that Aventi received the US$5.7 million under head (b). I have also found that the sum of $334,429.20 under head (a) was received by Alwie, and not Richard Chan (see [90] below). Hence, the plaintiffs’ claim for money had and received can only proceed against OAFL, Alwie and Susiana under heads (a), (c) and (d). I shall refer to the sums under heads (a), (c) and (d) as “the payments”.
[79] Alwie claims that OAFL was entitled to retain the payments under the 1st SPA. Although various un-pleaded defences were raised at the injunction hearing and at the trial, Alwie relies solely on the terms of the 1st SPA in his pleadings. In particular, he relies on Clause 4.02(2) to justify OAFL’s purported entitlement to retain the payments it received. This solitary basis was confirmed by Alwie in cross-examination, as well as by his counsel, Mr Murugaiyan. The proper construction of Clause 4.02(2), as will be discussed (at [96] to [104]), naturally becomes pivotal to the defence of OAFL and/or Alwie. As for Susiana, Alwie accepts that she did receive the sum of US$157,525 on his behalf as part of his commission as well as the return of his personal loan to Tjong (see [51] above).
[80] I shall first discuss the relevant principles of unjust enrichment so that the facts can be examined in their proper perspective. For completeness, I will also consider the various un-pleaded defences separately below as they have a material bearing on the credibility of some of the witnesses.
The law
[81] A claim of money had and received is part of the wider body of the law of unjust enrichment (Star Cruise Services Ltd v Overseas Union Bank Ltd [1999] 2 SLR(R) 183 at [120]), provided the following conditions are satisfied:
(a) the defendant has received a benefit (ie, he has been enriched);
(b) the enrichment is at the plaintiff's expense;
(c) it is unjust to allow the defendant to retain the enrichment; and
(d) there are no defences available to the defendant.
(see also Skandinaviska Enskilda Banken AB (Publ), Singapore Branch v Asia Pacific Breweries (Singapore) Pte Ltd and another and another appeal [2011] 3 SLR 540 at [110]).
[82] As a preliminary matter, I will first deal with the argument raised by Mr Murugaiyan, that the claim in unjust enrichment is premised on a “waiver of the tort” and therefore, if the plaintiffs “failed to establish a tort (ie conversion) [their] claim in restitution also fails”. In making this submission, Mr Murugaiyan relied on the Court of Appeal case of Yeow Chern Lean v Neo Kok Eng and another [2009] 3 SLR(R) 1131 (“Yeow Chern Lean”).
[83] I am not persuaded by the argument that the claim in unjust enrichment is contingent, or parasitic, upon the claim in conversion. In the first place, the two claims relate to different subject matter and different defendants. The claim in unjust enrichment relates only to the money payments allegedly wrongfully received by Richard Chan, Aventi (although I found no evidence of Aventi receiving the payments), OAFL, Alwie and Susiana. The claim in conversion relates only to the MEGL shares allegedly wrongfully received by Aventi, Johanes, OAFL and Alwie. They are two entirely different and separate claims and causes of action, which do not overlap whatsoever. In contradistinction, in Yeow Chern Lean, the claim in moneys had and received was brought in the alternative to a claim in conversion for identical subject matter: two cheques, allegedly misappropriated. In that situation, the claim in restitution functioned only as a remedy, and not a substantive cause of action as in the case here. As the Court of Appeal clearly stated (at [52]):
Receipt of benefit at the plaintiffs’ expense
[84] Turning to the first element, it seems clear to me that OAFL, Alwie and Susiana have benefitted from the receipt of the payments from Antig through MEGL. The payments are clearly valuable, financially quantifiable, and were not received by them as an incidental benefit or ministerially as agents (Seagate Technology Pte Ltd and another v Goh Han Kim [1994] 3 SLR(R) 836 at [26]).
[85] The next question to be determined is whether the benefit of the payments was at the plaintiffs’ expense. The test for this depends on whether the plaintiffs are seeking a personal or proprietary restitutionary claim. A personal claim in unjust enrichment is a claim for a personal restitutionary remedy, ie, a claim that the defendant should pay the claimant a sum of money corresponding to the value of a benefit that he unjustly received at the claimant’s expense. On the other hand, a proprietary claim in unjust enrichment is a claim for a proprietary restitutionary remedy, ie, a declaration that the claimant has title to the property owned by the defendant, accompanied by whatever order is needed to enable the claimant to realise his proprietary right (see Goff & Jones, The Law of Unjust Enrichment, (Sweet & Maxwell, 8th Ed, 2011) (“Goff & Jones”) at paras 7-01 and 7-02).
[86] While a claimant seeking a proprietary restitutionary remedy must establish some proprietary link to the money claimed via rules of following and tracing (Foskett v McKeown [2001] 1 AC 102 (“Foskett”) at 130), a claimant seeking a personal restitutionary remedy must show that he has suffered a loss sufficiently linked to the defendant’s gain. The plaintiffs seem to have pleaded both a personal as well as a proprietary restitutionary claim; they have pleaded that the first to sixth defendants have been unjustly enriched and are holding the said property under a constructive trust (ie, a proprietary restitutionary claim premised on establishing the plaintiffs’ proprietary interest in the payments and/or the MEGL shares transferred to the first to sixth defendants) and, also, that the share purchase price paid out to the first to sixth defendants are payable under an action for money had and received (ie, a personal restitutionary claim since the plaintiffs are demanding that the defendants personally account for those sums).
[87] To succeed in their proprietary restitutionary claim, the plaintiffs must be able to trace their PT Deefu shares to the payments transferred to OAFL, Alwie and Susiana. Tracing is the process of identifying a new asset as the substitute for the old, and has its basis in property law rather than the law of unjust enrichment (Foskett at 127-128). A plaintiff seeking a proprietary restitutionary remedy must thus show how his proprietary rights in the original asset have been converted into proprietary rights in the substituted property. I find that the plaintiffs’ PT Deefu shares cannot be traced into the payments paid out by Antig to OAFL, Alwie and Susiana. There is no evidence that these payments came from the sale of the PT Deefu shares or were in any way obtained by Antig through dealing with the PT Deefu shares. These funds were instead MEGL’s reserves which were used to pay for the PT Deefu shares. This being the case, it cannot be said that title in the PT Deefu shares were converted into proprietary rights in the payments, and the plaintiffs’ proprietary restitutionary claim must, accordingly, fail.
[88] As regards the plaintiffs’ personal restitutionary claim, the nexus between the plaintiffs’ loss and the defendants’ gain is easily established in a two-party case once it is shown that the plaintiff had transferred property to the defendant under circumstances resulting in the defendant being unjustly enriched. It has been observed that the complexion of the case changes in a multiple-party setting, where the question is, as Goff & Jones describes at para 6-52:
[89] Even though the present case features three parties, the basic principle that there must be a nexus between the plaintiffs’ loss and the gain by OAFL, Alwie and Susiana nevertheless applies.
[90] On the present facts, the analysis proceeds on two tracks. First, the sums of S$334,429.20 and US$157,525 received by Alwie and Susiana respectively, which were sums paid out of US$6 million of the Cash Component, were directly receivable by the plaintiffs under Clause 4.02(2). The plaintiffs say that on the completion day of the 1st SPA, ie, 13 June 2006, Richard Chan/MEGL had prepared a cheque for S$334,429.20 (which was equivalent to US$210,000 at the material time) made out to Coutts Bank in Singapore. This payment was therefore not strictly in compliance with Clause 4.02(2). He caused Tjong to sign on the photocopy of the cheque so as to make it appear that Tjong had received the cheque. The plaintiffs say that, without authority from Tjong, Richard Chan kept the cheque for himself and/or gave it Alwie. In his defence, Alwie admits that he (not OAFL) did receive the cheque for the sum of S$334,429.20 issued to Coutts Bank as part of a “commission” due to him for brokering the sale of the shares to Antig. In the course of the trial, he produced documents showing that the cheque for S$334,429.20 was indeed paid into a Coutts Bank account held by OAFL but beneficially owned by Alwie himself. According to Alwie, Tjong had offered him a finder’s fee of US$340,000 if he could find a buyer for the mine concession owned by PT Batubara. There is no agreement recording the amount of commission, the conditions upon which it would be paid, and how it would be paid. Alwie was not even able to identify the date on which the alleged commission agreement was concluded. He prevaricated as to whether the agreement was reached before or during the negotiations of the 1st SPA. In the premises, there is no evidence that Alwie is entitled to the commission/finder’s fee. That finding establishes that Tjong did not agree to the payment, thereby supporting my conclusion that Antig’s payment of S$334,429.20 was not in accordance with Tjong’s instructions and/or Clause 4.02(2).
[91] The plaintiffs also claim that the sum of US$157,525 was paid to Susiana without their authority. Further, Tjong claims that he does not owe Susiana any money and there was no reason to have paid her the sum of US$157,525. Susiana claims that the payment of US$157,525 to her was on account of Alwie’s entitlement to commission and his personal loan to Tjong. Not only was there no evidence to support the commission, there is equally no evidence to support the existence of this personal loan. This, again, corroborates my finding that the payment of US$157,525 to Susiana was not in accordance with Tjong’s instructions and/or Clause 4.02(2).
[92] It would appear that the plaintiffs, in advancing the argument that Alwie and/or Susiana were not entitled to receive the two sums, did not appreciate that such an argument would in effect undermine their own case for money had and received in relation to those two sums. This is because, by the plaintiffs’ own case, Antig acted contrary to Clause 4.02(2) by paying out the sums of S$334,429.20 and US$157,525 to Alwie and Susiana respectively. Further, Tjong did not agree to these two payments. The gains of S$334,429.20 and US$157,525 by Alwie and Susiana were therefore not at the expense of the plaintiffs, given that their recourse against Antig vis-à-vis the two sums remained alive. On this premise, the plaintiffs’ claim for money had and received in relation to the sums of S$334,429.20 and US$157,525 cannot succeed.
[93] Second, unlike the two sums of S$334,429.20 and US$157,525, Antig was contractually obliged to pay US$550,000 to OAFL under Clause 4.02(2). Although OAFL was entitled to receive it “for and on behalf of” the plaintiffs, OAFL is not entitled to retain the same (see [96] to [119] below). Given that Antig has discharged its obligation vis-à-vis the US$550,000 under Clause 4.02(2), the plaintiffs have lost their contractual recourse as against Antig in relation to that sum. Concommitantly, OAFL has received the payments pursuant to Clause 4.02(2). In other words, the nexus has been constituted by Antig’s performance of its obligation under Clause 4.02(2), which simultaneously extinguished the plaintiffs’ right of recourse against Antig and conferred a benefit upon OAFL. This is akin to a situation where money due to a claimant has been transferred by a third party to the claimant’s authorized agent (see, for example, Asher v Wallis (1707) 88 ER 956 (QB)). This leaves the court with the issue of whether the requirement of an unjust factor has been made out by the plaintiffs vis-à-vis the receipt by OAFL of US$550,000.
Unjust factor
[94] Having found that OAFL’s receipt of US$550,000 was at the plaintiffs’ expense, what is the unjust factor? The approach taken by our courts, as well as the courts in England, requires the identification of a specific unjust factor to justify disgorging a defendant of his benefit. There is, as yet, no general principle giving a claimant a right of recovery from a defendant who has been unjustly enriched at the claimant’s expense (Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 at 196-197 per Lord Browne-Wilkinson), and the courts do not have “a discretionary power to order repayment whenever it seems... just and equitable to do so” (Kleinwort Benson Ltd v Birmingham CC [1996] 4 All ER 733 at 737 per Evans LJ). Hence, “it will not do for claimants to plead generalised claims in unjust enrichment, nor is it acceptable to assert that the circumstances make the defendant’s enrichment unfair in a broad sense... specific reasons anchored in the case law must be given to justify the assertion that the defendant’s enrichment is unjust” (Uren v First National Home Finance Ltd [2005] EWHC 2529 at [16]).
[95] OAFL has received, and seek to retain, the sum of US$550,000. The 1st SPA, via Clause 4.02(2), clearly confers authority on OAFL to receive this sum. Does the 1st SPA also confer authority on OAFL to retain this sum for its personal benefit? This depends on a construction of Clause 4.02(2).
Construction of Clause 4.02(2)

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Tjong Very Sumito and others v Chan Sing En and others

Laws this judgment relies on

Grounds of decision

Introduction

The parties

The sale and purchase agreements

The 1 SPA

The supplemental agreements

The 2 and 3 SPAs

Procedural history

The Antig Suit

The Mareva proceedings

The plaintiffs’ application for judgment in default against Aventi and OAFL

Stay of present proceedings against MEGL and Antig

The plaintiffs’ claims

Claims relating to the 1 SPA

Alleged discrete sums wrongfully paid out

(i) Aventi and Johanes: US$5.7 million and 124,856,364 MEGL shares

(ii) OAFL and Alwie: US$550,000 and 42,102,727 MEGL shares

(iii) Susiana: US$157,525

(iv) Richard Chan and Alwie: S$334,429.20

Balance purchase price of US$12,471,227

Claims relating to the 2 and 3 SPAs

Avoidance of 2 and 3 SPAs based on allegation of duress

Claims for damages based on allegation of fraudulent misrepresentation

Unlawful means conspiracy involving Richard Chan, MEGL, Antig and/or Jake

Unlawful means conspiracy involving Richard Chan, MEGL, Antig, AAML and/or Edwin

Tjong’s standing to sue

Lifting of the corporate veil

The law

OAFL

Aventi

AAML

Claims against Richard Chan, Aventi, Johanes, OAFL, Alwie and Susiana

Money Had and Received

The law

Receipt of benefit at the plaintiffs’ expense

Unjust factor

Construction of Clause 4.02(2)