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  • Flamelite (S) Pte Ltd and others v Lam Heng Chung and others[2001] 3 SLR(R) 610; [2001] SGCA 75
    that while the general arrangement of the components is similar Swissflame s framing system is not an exact reproduction nor is it a slavish copy of the plaintiffs framing systems in terms of material and dimensions Moreover the drawings contained only non proprietary principles or methods of creating such fire rated doors and screens and that the methods had been in common use in the industry for some 20 years already being largely dictated by functions Vanderstukken admitted that Glaverbel s design is elementary and set out a simple principle of construction 13 As the preliminary sketches relating to the Glaverbel and the Flamelite works were not produced there was no way to know what was contained therein even though it is alleged by the plaintiffs that annexures A and B to the statement of claim are illustrative of what the preliminary sketches depicted Furthermore the defendants relied upon s 69 of the Copyright Act Cap 63 1988 Ed the Act and asserted that these products do not infringe any copyright of the plaintiffs as the products would not appear to persons who are not experts in relation to such doors to be reproductions of the plaintiffs alleged artistic works 14 It should be mentioned that in the court below Flamelite and Flametech had also alleged that Lam and Wu had committed breaches of confidence However in this appeal the claim based on breaches of confidence is no longer pursued by the two plaintiffs Agreed facts 15 During the course of the trial the parties also agreed inter alia to the following The preliminary sketches of Vanderstukken although no longer to be found are nevertheless reflected in three University of Ghent Test Reports Copyright in the preliminary sketches subsists in Singapore by virtue of the Copyright International Protection Regulations 1990 and 1996 and the copyright to the same vested in Glaverbel as the employer of Vanderstukken 16 The preliminary sketches of Glaverbel were not seen by Loke or the defendants What Loke did in 1991 while in the employment of Flametech was to use the Glaverbel s University of Ghest Test Reports Nos 5592 6223 and 5673 as precedents made changes and created preliminary drawings of framework for a fire rated glass and fixed screens Loke in turn engaged a freelance draughtsman to reproduce the preliminary drawings into shop drawings The preliminary drawings of Loke were never seen by the defendants and could no longer be found having been destroyed or thrown away The copyright in the preliminary drawings originally vested in Flametech In April 1994 Loke acquired Flametech and Flametech in turn assigned its copyright in the preliminary drawings the Flamelite works to Flamelite 17 While Lam was engaged by the plaintiffs he was given the shop drawings of the plaintiffs framework Wu also had access to the plaintiffs shop drawings while he was employed by Flamelite There is however a dispute as to whether Loke told Wu that the shop drawings were proprietary and confidential Since joining Swissflame Wu had quoted and sold Swissflame s fire rated glass doors to various customers Decision below 18 In relation to Glaverbel works the judge below found that they consisted really of only ideas He also found that Glaverbel having consented to the use of their drawings by Flametech was thus not entitled to mount their claim against the defendants because it would create unwitting duplication and double counting 19 In any case the judge found that there was no infringement of the plaintiffs works because a The works related to a method of construction of a functional article The works could not be proprietary and the court would not allow a claimant to establish a monopoly through a claim in copyright b The court accepted Lam s explanation that in the course of his employment with Flamelite and Flametech he had not seen any of the plaintiffs preliminary drawings but he had seen only some rough hand drawn sketches of Wu c There was no substantial similarity between the Swissflame products and the plaintiffs works The judge noted that besides differences as to materials and dimensions there were other differences in features between the plaintiffs works and the defendants product Issues 20 There are basically only two issues before us The first is whether there had been any infringement of the copyright works as the defendants did not exactly reproduce the plaintiffs drawings The second is whether the defence in s 69 is available to the defendants in the circumstances of this case Locus of Glaverbel 21 Before we proceed to examine the two issues there is a need for us to briefly touch on two ancillary questions The first is whether Glaverbel is entitled to bring the present claim The judge seemed to hold that in view of Glaverbel having consented to Flametech and Flamelite using its design Glaverbel has as a result lost its right to sue for infringement We do not think that view is correct The fact that Glaverbel has consented or licensed another to use the design does not mean that Glaverbel has ceased to be the copyright owner of the design Such a licence cannot abrogate the rights of the copyright owner Section 31 1 of the Act expressly permits the copyright owner to grant licences to third parties Granting of a licence to a party does not mean granting a licence to the world at large It would have been different if Glaverbel had assigned its rights to Flametech Flamelite 22 Turning next to the second ancillary question the trial judge found that the Glaverbel works and the Flamelite works involved an elementary or simple principle of construction While he thought they were mere ideas he did not go on to expressly say that the works are thereby incapable of acquiring copyright We would reiterate that to obtain copyright it is not necessary that the ideas or thoughts should be original or complex Copyright protects the expression of ideas not the ideas themselves Mere simplicity does not mean that copyright is precluded We are reminded of what Megarry J stated in the following passage in British Northrop Limited v Texteam Blackburn Limited 1974 RPC 57 at 68 It may indeed be that some thing may be drawn which cannot fairly be called a diagram or a drawing of any kind a single straight line drawn with the aid of a ruler would not seem to me to be a very promising subject for copyright But apart from cases of such barren and naked simplicity as that I should be slow to exclude drawings from copyright on the mere score of simplicity I do not think that the mere fact that a drawing is of an elementary and commonplace article makes it too simple to be the subject of copyright Infringement 23 The primary concern of copyright is with the form in which an idea is expressed The requirement of originality in copyright law relates solely to the form in which the work is expressed University of London Press Limited v University Tutorial Press Limited 1916 2 Ch 601 To determine the issue of infringement it is essential to bear in mind that in the statement of agreed facts the parties agreed that Swissflame s framing system is not an exact reproduction nor a slavish copy of the plaintiffs framing system in terms of materials and dimensions This is further confirmed by a chart which the defendants submitted at the trial where the Flamelite and Glaverbel works were compared with Swissflame s products and which highlighted that differences existed in relation to materials and dimensions 24 The plaintiffs pointed out that the defendants expert witnesses acknowledged that there could be a variety of ways in which the fire rated glass doors and screens could be designed Although these experts maintained that the Flamelite and Glaverbel works comprised a common method of construction they admitted that this was said from an engineering or technical point of view Interestingly the defendants had adduced evidence of a variety of designs adopted by other manufacturers So the plaintiffs contended that it is not true that functional reasons would require that the design of such doors screens would all be the same The plaintiffs submitted that there is much room for creativity within the common method of construction The differences in materials dimensions and features mentioned by the judge were trivial and do not render the infringement any less so 25 The plaintiffs also emphasised the fact that the defendants had not really explained how they arrived at the designs for their fire rated glass doors and screens which are so close to theirs This coupled with the fact that Lam and Wu had access to the shop drawings of the Flamelite and Flametech products strongly suggests that the defendants must have simply copied the plaintiffs works 26 Under s 26 b i of the Act copyright confers upon the owner the exclusive rights to inter alia reproduce an artistic work in any material form An artistic work in a two dimensional form is deemed to be reproduced if a version of the work is produced in a three dimensional form s 15 3 a Under s 10 1 infringement is established as long as a substantial part of the work is reproduced 27 To succeed in copyright infringement the plaintiff must prove that copying has taken place Such proof can come in the form of establishing similarity combined with proof of access to the plaintiff s works 28 We will first deal with the question of access as it can be disposed of shortly As Park J said in A Fulton Co Ltd v Grant Barnett Co Ltd 2001 RPC 257 at 284 It is rare in intellectual property cases for there to be direct evidence of copying of someone s else copyrights or designs Plagiarists do their copying in secret The courts proceed on the basis that a close similarity between the claimant s design and the alleged infringing article coupled with the opportunity for the alleged copier to have access to the claimant s design or work raises an inference of copying It is then up to the defendant to rebut the inference by evidence which shows that the apparent similarity arose in some other way In Ibcos Computers Ltd v Barclays Mercantile Highland Finance Ltd 1994 FSR 275 at 297 Jacob J said that the concept of sufficient similarities shifting the onus to the defendant to prove non copying is well recognised in copyright law He added that he thought that the proposition is not so much one of law as of plain rational thought 29 In this case it is not in dispute that Lam had access to the shop drawings incorporating the Flamelite and Glaverbel works He was then a subcontractor fabricating the fire rated glass doors and screens for Flametech and Flamelite Wu also had access to the shop drawings of Flamelite This is set out in para 16 of the statement of agreed facts At all material times Wu knew or was familiar with the framing system used in relation to Flamelite s fire rated glass doors and screens 30 In this connection we ought to mention that the trial judge seemed to have accepted Lam s evidence in chief that he received instructions through some rough hand written sketches and seemed to think that Lam did not have access to the shop drawings But in cross examination Lam admitted that he was shown shop drawings of the plaintiffs More importantly in para 15 of the statement of agreed facts it is stated that in the course of his engagement as a subcontractor Lam was given shop drawings of the plaintiffs frames Thus the judge s finding on this is not correct 31 It is not necessary that the copying should be consciously done Subconscious copying is just as infringing as is apparent from the following passage from Copinger Skone James on Copyright 14th Ed vol 1 at p 402 As already pointed out since copyright is a proprietary right ignorance is no defence to an infringement claim If therefore the plaintiff s sic work has been copied from the plaintiff s either directly or indirectly the fact that the defendant was unaware that the work he was copying in this way existed or was the plaintiff s or was the subject of copyright or whether he thought he had a licence provides no defence to a claim for primary infringement although in limited circumstances it may affect the remedy Similarity 32 We now turn to consider the question whether there is substantial similarity between the Swissflame products and the two copyright works In the statement of agreed facts the parties have set out their positions on the point as follows The Plaintiffs claim that Swissflame s framing system is substantially similar to or a near exact reproduction of the Plaintiffs framing system Whilst the Defendants admit that the general arrangement of components is similar Swissflame s framing system is not an exact reproduction nor a slavish copy of the Plaintiffs framing system in terms of materials and dimensions Further the Defendants say that the frame design is a nonproprietary method of construction and is largely dictated by function 33 The trial judge having examined the comparison chart tendered to court by the defendants came to the conclusion that In my view besides the differences as to dimensions not all the features which appear in the plaintiffs product can be found in the defendants design Besides looking at the products from the standpoint of details I am also in agreement with defendants counsel that the design alluded to by the plaintiffs has been demonstrably elementary and this aspect in so far as the fourth plaintiffs designs are concerned it had been conceded albeit rather gingerly by Vanderstukken page 179 of the NE that they were elementary The addition of the much talked about armour cladding by Loke too does not take their case any further as it is not claimed that that feature forms part of the infringement In my determination annexures A and B illustrate nothing but a non proprietary principle or method of constructing the fire rated glass doors and structural frames I agree in this regard with the testimonial assertions by the defendants that the method referred to involves the commonplace mounting of fire resistant glass on a hollow steel section between fireproof calcium silicate boards The steel section and calcium silicate boards are then joined to form a structural frame The gap between the fire resistant glass and the calcium silicate board is filled using fireproof materials I must further mention that I accept as valid the opinion of Associate Professor Chew that the framing system alluded to illustrate the simplest and most fundamental method of constructing a fire rated glass door from an engineering point of view I also accept as valid Mr Kettle s view that technically similar basic designs have been in existence for some time and have been previously tested by others in conjunction with other proprietary types of insulating glass One other observation which requires inclusion here is that any likeness or close resemblance between the plaintiffs and the defendants drawings is mainly owing to the function and functionality of the method which I accept as elementary 34 Counsel for the plaintiffs submitted that copyright protects against copying and that the judge did not identify the features of the plaintiffs works which were copied neither did he rule that what the defendants had copied did not constitute a substantial part of the plaintiffs works The chart produced by the defendants set out the differences between the Glaverbel works and the Flamelite works on the one hand and Swissflame works on the other and those differences are quite insignificant 35 It is expressly provided in the Act that to constitute infringement what is copied must be a substantial part of the artistic work What would constitute substantial part was stated rather eloquently by Buckley LJ in Catnic Components Limited v Hill Smith Limited 1979 FSR 619 at 626 627 as follows I do not question the principle that in deciding whether what had been reproduced by an alleged infringer is a substantial part of the work allegedly infringed one must regard the quality that is to say the importance rather than the quantity of the part reproduced see Ladbroke Football Ltd v William Hill Football Ltd 1964 1 WLR 273 per Lord Reid at p 276 and per Lord Pearce at p 293 but what is protected is the plaintiffs artistic work as such not any information which it may be designed to convey If it is said that a substantial part of it has been reproduced whether that part can properly be described as substantial may depend upon how important that part is to the recognition and appreciation of the artistic work If an artistic work is designed to convey information the importance of some part of it may fall to be judged by how far it contributes to conveying that information but not in my opinion by how important the information may be which it conveys or helps to convey What is protected is the skill and labour devoted to making the artistic work itself not the skill and labour devoted to developing some ideas or invention communicated or depicted by the artistic work The protection afforded by copyright is not in my judgment any broader as counsel submitted where the artistic work embodies a novel or inventive idea than it is where it represents a commonplace object or theme 36 In Ladbroke Football Ltd v William Hill Football Ltd 1964 1 All ER 465 1964 1 WLR 273 which was a case concerning literary work Lord Evershed explained 1964 1 All ER 465 at 473 1964 1 WLR 273 at 283 the concept of substantial reproduction as follows what amounts

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  • George Raymond Zage III and another v Ho Chi Kwong and another[2010] 2 SLR 589; [2010] SGCA 4
    experience in engaging lawyers the Judge found that he would not have known or suspected that Rasif had been involved in an impropriety 14 Lastly the Judge considered that even if DeFred was to be found liable for either dishonest assistance or knowing receipt Ho would not be personally liable because he was never in contact with Rasif and played only a limited role in the prevailing circumstances There was no reason to lift the corporate veil 15 We should add that in reaching this conclusion the Judge had noted at 143 of the Judgment that much of what the appellants characterised as suspicious circumstances throughout the course of the trial were not pleaded nor was there any application to amend the pleadings to include such new assertions The Judge nonetheless for completeness considered the entire appellants submissions as though the reasons for suspicions had been pleaded The parties arguments on appeal 16 According to counsel for the appellants Mr Harry Elias SC Mr Elias the respondents knew or ought to have known that there was a breach of trust by Rasif as the payments for the transaction were from the DRP clients account Mr Elias submitted that the Rasif transaction was unusual in several aspects First Rasif appeared to be in an unusual hurry to conclude the transaction and selected without much thought a total of 27 items worth a very large amount 2 088 000 over a short span of four days He agreed to inflated prices quoted for some loose stones and accepted old stock and jewellery with no investment value When he made payment for the initial batch of items he paid a further 200 000 via telegraphic transfer in addition to the purchase price After he took delivery he did not make a thorough inspection of them Secondly the respondents conduct during the transaction showed that they were aware that Rasif was not an experienced investor The amount sold to Rasif compared to DeFred s annual turnover was extraordinarily large yet they did not enquire at all into Rasif s background and charged inflated prices for some of the loose stones Receipts were not provided and there was a lack of information on the delivery orders Thirdly given Ho s background knowledge and experience he should have read and understood the words on the Cash Cheque stating that the cheque was drawn from DRP s CLIENT S ACCOUNTS Thus when the Cash Cheque was handed over to Thomas the accumulation of suspicious circumstances should have alerted the respondents to the impropriety of Rasif s actions and the respondents should have stopped the transaction immediately 17 On the other hand Mr Hri Kumar SC Mr Kumar counsel for the respondents made the following arguments First the appellate court should be slow to depart from the Judge s finding of fact that the respondents did not have the requisite knowledge that Rasif was acting in breach of trust when he purchased the precious stones and jewellery from DeFred Secondly the transaction was not unusual DeFred had many years ago sold jewellery to royalty and although DeFred was a retail jeweller Rasif actually obtained a good price for the diamonds It was common practice for retailers to sell by way of certificates and the comparison to the previous turnover of DeFred should also be considered in the light of the broader market trend of an increasing demand for diamonds Thirdly Rasif played the role of a genuine investor well and the DeFred staff trusted him because he was a lawyer He was careful in choosing what to buy and he examined the stones with a loupe himself The Judge had queried Ho and found that he did not pay attention to the words on the Cash Cheque but the fact that he did not pay attention was not unconscionable As the events unfolded the transaction did not become more suspicious as the appellants alleged but on the contrary less suspicious By the time the Cash Cheque was drawn the respondents did not pay much attention to it Not many people outside the legal profession would have known what the words on the Cash Cheque meant Despite Ho s past dealings with lawyers he did not appreciate the significance of those words 18 Finally Mr Kumar submitted that Ho was not substantially involved in the transaction at all Instead he was involved in a commercial development project in Johor Bahru Malaysia He trusted Thomas and let him run the business in Singapore According to Mr Kumar although Ho did play some part in the transaction by sourcing for stones this was merely a peripheral role The law 19 This appeal is primarily concerned with the respondents liability as either recipients of the money from Rasif or accessories to Rasif s disposal of the appellants money ie the two limbs of liability set out in Barnes v Addy 1874 LR 9 Ch App 244 The two limbs as the Judge below correctly noted at 15 may overlap in certain situations At the heart of the present appeal lies the issue of whether the respondents had the requisite knowledge under either the limb of dishonest assistance or knowing receipt such that they are liable as constructive trustees to the appellants With that in mind we think it will be useful to outline the relevant legal principles Dishonest assistance 20 The elements of a claim in dishonest assistance are a the existence of a trust b a breach of that trust c assistance rendered by the third party towards the breach and d a finding that the assistance rendered by the third party was dishonest see generally Bansal Hemant Govindprasad v Central Bank of India 2003 2 SLR R 33 Bansal and Caltong Australia Pty Ltd v Tong Tien See Construction Pte Ltd 2002 2 SLR R 94 Caltong Neither the appellants nor the respondents disagree with the Judge s exposition of the law on dishonest assistance Nonetheless it will be helpful to survey the law because of recent developments in other common law jurisdictions since the law in this area was last considered by this court in Bansal The modern starting point in assessing liability in this problematic area of the law remains the Privy Council decision of Royal Brunei Airlines Sdn Bhd v Philip Tan Kok Ming 1995 2 AC 378 Royal Brunei Airlines where Lord Nicholls lucidly pointed out that while dishonesty implies conscious impropriety and thus has a hint of subjectivity t he standard of what constitutes honest conduct is not subjective Honesty is not an optional scale with higher or lower values according to the moral standards of each individual emphasis added at 389 Lord Nicholls s approach was adopted without qualification by this court in Bansal at 30 21 However the court in Bansal did not appraise two other relevant cases decided not long after Royal Brunei Airlines namely Twinsectra Ltd v Yardley 2002 2 All ER 377 Twinsectra a decision of the House of Lords and Malaysian International Trading Corp Sdn Bhd v Interamerica Asia Pte Ltd 2002 2 SLR R 896 Malaysian International Trading In Twinsectra the Royal Brunei Airlines standard of honesty was further elaborated upon by Lord Hutton for the majority where he said at 35 36 that There is in my opinion a further consideration which supports the view that for liability as an accessory to arise the defendant must himself appreciate that what he was doing was dishonest by the standards of honest and reasonable men A finding by a judge that a defendant has been dishonest is a grave finding and it is particularly grave against a professional man such as a solicitor Notwithstanding that the issue arises in equity law and not in a criminal context I think that it would be less than just for the law to permit a finding that a defendant had been dishonest in assisting in a breach of trust where he knew of the facts which created the trust and its breach but had not been aware that what he was doing would be regarded by honest men as being dishonest It would be open to your Lordships to depart from the principle stated by Lord Nicholls that dishonesty is a necessary ingredient of accessory liability and to hold that knowledge is a sufficient ingredient But the statement of that principle by Lord Nicholls has been widely regarded as clarifying this area of the law and as he observed the tide of authority in England has flowed strongly in favour of the test of dishonesty Therefore I consider that the courts should continue to apply that test and that your Lordships should state that dishonesty requires knowledge by the defendant that what he was doing would be regarded as dishonest by honest people although he should not escape a finding of dishonesty because he sets his own standards of honesty and does not regard as dishonest what he knows would offend the normally accepted standards of honest conduct emphasis added in bold italics and italics The approach suggested in Twinsectra has been followed in Singapore by the High Court in Malaysian International Trading There Lai Kew Chai J applied a combined test of an objective standard of honesty coupled with the subjective elements of the defendant s personal characteristics and knowledge 22 It is pertinent to note that Lord Hutton s speech in Twinsectra has now been clarified by the Privy Council in Barlow Clowes International Ltd in liquidation v Eurotrust International Ltd 2006 1 All ER 377 Barlow Clowes The Privy Council in that case affirmed that Twinsectra did not depart from the objective standard of honesty laid down in Royal Brunei Airlines Lord Hoffmann stated at 15 that Their Lordships accept that there is an element of ambiguity in Lord Hutton s remarks which may have encouraged a belief expressed in some academic writing that the Twinsectra case had departed from the law as previously understood and invited inquiry not merely into the defendant s mental state about the nature of the transaction in which he was participating but also into his views about generally acceptable standards of honesty But they do not consider that this is what Lord Hutton meant The reference to what he knows would offend normally accepted standards of honest conduct meant only that his knowledge of the transaction had to be such as to render his participation contrary to normally acceptable standards of honest conduct It did not require that he should have had reflections about what those normally acceptable standards were emphasis added It therefore seems quite settled following from Lord Hoffmann s speech in Barlow Clowes that for a defendant to be liable for knowing assistance he must have such knowledge of the irregular shortcomings of the transaction that ordinary honest people would consider it to be a breach of standards of honest conduct if he failed to adequately query them The Judge below approved of this interpretation at 28 30 of the Judgment we see no reason to depart from this analysis Knowing receipt 23 The elements required to establish knowing receipt are a a disposal of the plaintiff s assets in breach of fiduciary duty b the beneficial receipt by the defendant of assets which are traceable as representing the assets of the plaintiff and c knowledge on the part of the defendant that the assets received are traceable to a breach of fiduciary duty see Caltong at 31 citing El Ajou v Dollar Land Holdings plc 1994 2 All ER 685 at 700 As with dishonest assistance the difficulty arises in determining precisely the degree of knowledge that is required for recipients of trust property to be fixed with liability The test was restated by the landmark English Court of Appeal decision in Bank of Credit and Commerce International Overseas Ltd v Akindele 2001 Ch 437 Akindele Nourse LJ after a comprehensive survey of the earlier authorities held that T he recipient s state of knowledge must be such as to make it unconscionable for him to retain the benefit of the receipt at 455E In order to better understand the ramifications of this formulation a brief recapitulation of Nourse LJ s survey of the history of knowing receipt would be helpful 24 Prior to Akindele there was considerable confusion as to whether actual knowledge or constructive notice sufficed to ground liability for knowing receipt One line of authorities from the English appellate courts see Rolled Steel Products Holdings Ltd v British Steel Corporation 1986 Ch 246 Agip Africa Ltd v Jackson 1990 Ch 265 and Houghton v Fayers 2000 1 BCLC 511 suggested that constructive notice was sufficient On the other hand several judgments emanating from courts of first instance took the contrary position and maintained that only actual knowledge could justify the imposition of liability for knowing receipt see In re Montagu s Settlement Trusts 1987 Ch 264 Eagle Trust plc v SBC Securities Ltd 1993 1 WLR 484 Eagle Trust and Cowan de Groot Properties Ltd v Eagle Trust plc 1992 4 All ER 700 In Eagle Trust Vinelott J inter alia cited at 503E the famous passage by Lindley LJ in Manchester Trust v Furness 1895 2 QB 539 at 545 to justify this stricter approach In dealing with estates in land title is everything and it can be leisurely investigated in commercial transactions possession is everything and there is no time to investigate title and if we were to extend the doctrine of constructive notice to commercial transactions we should be doing infinite mischief and paralysing the trade of the country emphasis added 25 However this vigorous debate had been earlier apparently glossed over in the well known judgment of Peter Gibson J in Baden v Société Générale pour Favoriser le Développement du Commerce et de l Industrie en France SA 1993 1 WLR 509 Baden where he accepted the suggestion of counsel in that case to categorise knowledge as a actual knowledge b wilfully shutting one s eyes to the obvious c wilfully and recklessly failing to make such inquiries as an honest and reasonable man would make d knowledge of circumstances which would indicate the facts to an honest and reasonable man and e knowledge of circumstances which will put an honest and reasonable man on inquiry the Baden categories According to Nourse LJ the first three Baden categories constituted or ought to be taken to constitute actual knowledge while the latter two were instances of constructive knowledge Nourse LJ called for the rejection of such artificial categorisation and the jettisoning of the divide between actual and constructive knowledge in knowing receipt cases It seems to us that there is merit in Nourse LJ s suggestion to drop the Baden categorisation as d and e above incline towards equating negligence with knowledge As mentioned earlier he suggested replacing this with the single touchstone of unconscionability 26 Finally in the Commonwealth jurisdictions of New Zealand and Canada constructive notice was held to be sufficient for recipient liability to be imposed see Westpac Banking Corporation v Savin 1985 2 NZLR 41 Westpac Banking and Citadel General Assurance Co et al v Lloyds Bank Canada et al 1997 152 DLR 4th 411 Of particular significance is Richardson J s decision in Westpac Banking where he said at 53 Clearly Courts would not readily import a duty to inquire in the case of commercial transactions where they must be conscious of the seriously inhibiting effects of a wide application of the doctrine Nevertheless there must be cases where there is no justification on the known facts for allowing a commercial man who has received funds paid to him in breach of trust to plead the shelter of the exigencies of commercial life In this regard there is a further consideration affecting the receipt of funds in discharge of indebtedness where for example a customer s account with a bank is overdrawn Where the creditor is pressing for payment and thus both stands to benefit from the payment and designs and stipulates for that benefit it will be less easy for the creditor to contend that the regular pressures of commercial life must be taken to have ruled out any need for inquiry emphasis added 27 Against this broad backdrop of authorities Nourse LJ regarded that the true purpose behind the previous attempts at categorisation of knowledge was actually to enable the court to determine whether the recipient s conscience was sufficiently affected such as to justify a finding of liability as a constructive trustee This formulation would also resolve or at least in Nourse LJ s words pay equal regard to the wisdom of both Lindley LJ s decision in Manchester Trust v Furness 24 supra on the one hand and Richardson J s decision in Westpac Banking on the other Interestingly Nourse LJ also considered but rejected Lord Nicholl s suggestion in his article written extra judicially Knowing Receipt The Need for a New Landmark from Cornish et al Restitution Past Present and Future Hart Publishing Oxford 1998 at p 231 that the courts move from a fault based regime of knowing receipt towards a consolidated unjust enrichment regime 28 Following Akindele 23 supra the English Commercial Court held in Papamichael v National Westminster Bank plc 2003 1 Lloyd s Rep 341 that actual knowledge was required for knowing receipt but this view was roundly criticised as being too narrow an interpretation of Akindele by Carnwath LJ at para 35 in the English Court of Appeal decision in Criterion Properties Plc v Stratford UK Properties LLC 2003 1 WLR 2108 at 2120 the House of Lords did not comment on the issue when the case went on appeal in Criterion Properties plc v Stratford UK Properties LLC 2004 1 WLR 1846 Very recently in Charter plc v City Index Ltd 2008 1 Ch 313 Carnwarth LJJ reaffirmed that liability for knowing receipt depends on the defendant having sufficient knowledge of the circumstances of the payment to make it unconscionable for him to retain the benefit or pay it away for his own purposes at 321G 29 In Singapore the High Court adopted Akindele in Comboni Vincenzo v Shankar s Emporium Pte Ltd 2007 2 SLR R 1020 Comboni Vincenzo Kan Ting Chiu J elaborated upon the concept of unconscionability as follows at 64 Unconscionability relates to the state of a person s knowledge When a person knowingly assists in a breach of trust or knowingly receives property in respect of which a breach of trust is committed equity intervenes and constitutes him a constructive trustee The knowledge could be actual knowledge or it could be a wilful avoidance of the knowledge ie knowledge within the second and third Baden categories But when there is no actual knowledge or wilful avoidance of the knowledge and the person s awareness comes within the last two Baden categories his conscience should not be called into question He will not be deemed a constructive trustee and any liability on his part would be founded in tort or contract for his failure to discharge his tortious or contractual obligations The position taken in Comboni Vincenzo has since been followed by another High Court case Relfo Ltd v Bhimji Velji Jadva Varsani 2008 4 SLR R 657 at 44 30 More recently in a Hong Kong Court of Appeal decision Akai Holdings Ltd in liquidation v Thanakharn KasiKorn Thai Chamkat Mahachon 2009 HKCU 1176 unreported Akai Holdings Cheung JA comprehensively surveyed the authorities on knowing receipt throughout the UK and the Commonwealth and came to the conclusion that although the test for knowledge is as laid out in Akindele constructive notice as a doctrine could still be relevant in determining whether the conscience of the defendant was affected In particular Cheung JA relied on the English Court of Appeal decision in MacMillan Inc v Bishopsgate Investment Trust Plc No 3 1995 1 WLR 978 at 1000 a case not cited in Akindele where Millett J said It is true that many distinguished judges in the past have warned against the extension of the equitable doctrine of constructive notice to commercial transactions see Manchester Trust v Furness 1895 2 Q B 539 545 546 per Lindley L J but they were obviously referring to the doctrine in its strict conveyancing sense with its many refinements and its insistence on a proper investigation of title in every case The relevance of constructive notice in its wider meaning cannot depend on whether the transaction is commercial the provision of secured overdraft facilities to a corporate customer is equally commercial whether the security consists of the managing director s house or his private investments The difference is that in one case there is and in the other there is not a recognised procedure for investigating the mortgagor s title which the creditor ignores at his peril emphasis added 31 Cheung JA in setting out his views also considered various academic viewpoints This included an article by Charles Harpum The Stranger as Constructive Trustee 1986 102 LQR 114 at 125 Harpum where the author wrote that constructive notice could be applied albeit in a modified form for claims in knowing receipt because i n commercial dealings where possession is everything and there is no time to investigate title constructive notice will usually have no application and this is particularly so in relation to sales of goods However the mere fact that a transaction is a commercial one does not suffice to exclude a duty of inquiry from arising in any circumstances regardless of ordinary business practices The pattern of inquiries to be followed by a person acquiring property for his own benefit is usually well known in advance and provides a simple yardstick for determining whether a recipient does or does not have notice of a matter Where a person does not receive property for his own benefit that yardstick is absent In such cases it is suggested that strict constructive notice should be inapplicable because otherwise the equation with common law negligence which has been already been criticised becomes inevitable To decide ex post facto that inquiries should have been made may place intolerable burdens on persons dealing with fiduciaries emphasis added This viewpoint has also been forcefully expounded by David Fox in his article Constructive Notice and Knowing Receipt An Economic Analysis 1998 CLJ 391 at p 395 where he wrote Lindley L J s comparison with land dealings is important It assumes quite unnecessarily that constructive notice always entails the same detailed level of inquiry that purchasers of land were expected to observe If notice meant only this then there would indeed be compelling reasons against introducing it into commerce But the objection is too simple It is not a plain choice between admitting notice at the full conveyancing standard and excluding it altogether There is no reason in principle why the standard of inquiry should not vary from one kind of transaction to another The recipient of the property is only expected to act reasonably given the exigencies and the customary practices of the situation in which he works Notice can be sensitive to the demands of commercial dealing where speed and security of transaction are important Recent authority supports this more flexible view The conduct of a bank receiving a deposit of misappropriated trust money should be measured against the standard of inquiry that could reasonably be expected of a banker not a purchaser of land Likewise the facts that raise the duty of inquiry may differ from one kind of property transfer to another Outside land transactions inquiries need not be made as a matter of routine A commercial recipient may only be put on inquiry if the facts immediately known to him make it glaringly obvious that some impropriety is afoot emphasis added in bold italics and italics 32 As candidly acknowledged by Nourse LJ when he formulated the test in Akindele 23 supra unconscionability is a malleable standard that is not free from difficulty in its application The degree of knowledge required to impose liability will necessarily vary from transaction to transaction In cases where there is no settled practice of making routine enquiries and prompt resolution of the transaction is required it seems to us clear that clear evidence of the degree of knowledge and fault must be adduced We are also inclined to agree that the test as restated in Akindele does not require actual knowledge This would be contrary to what we believe was the spirit and intent of Nourse LJ s formulation it seems to us that actual knowledge of a breach of trust or a breach of fiduciary duty is not invariably necessary to find liability particularly when there are circumstances in a particular transaction that are so unusual or so contrary to accepted commercial practice that it would be unconscionable to allow a defendant to retain the benefit of receipt The test of unconscionability should be kept flexible and be fact centred 33 The Judge below distinguished John v Dodwell 12 supra and Reckitt v Barnett 12 supra on the basis that they imposed strict liability which was at odds with the current position in law We would agree with the basic proposition that the law of knowing receipt does not impose strict liability However it is debatable whether indeed these two cases stand for that proposition It seems to us that upon closer analysis these are just cases where moneys were received with the knowledge that the authority to give was tainted We now examine these cases 34 In John v Dodwell the manager of a firm was authorised to draw cheques on the firm s account with a brokerage Meanwhile the manager in his personal capacity bought shares from the same brokerage but paid for them using cheques drawn from the firm s account The Privy Council formed the view that on the face of the cheques the manager had without showing any authority to do so drawn cheques for his own purposes The brokerage clerks must have appreciated that the firm was the drawer of the cheques and so whatever they knew of the manager s real transactions the brokerage had taken an unmistakable and grave risk by accepting the cheques at 568 569 On this basis the Privy Council decided that the brokerage had notice of the manager s breach of duty 35 After this case came the decision of Reckitt v Barnett There a solicitor Lord Terrington holding the power of attorney to draw cheques for the management of the appellant s affairs abused this power to draw a cheque in payment of the solicitor s personal debt with the respondents The cheque was signed Sir Harold J Reckitt Bart by Terrington his Attorney at 181 The House of Lords found that the respondents had on the cheque plain notice that they were receiving the appellant s money and they can be in no better position than if they had then asked to see and had been shown the authority under which Lord Terrington was acting It is a simple case of receipt by the respondents of the appellant s money with the knowledge that it was the appellant s money in payment of Lord Terrington s debt at 182 As was the case in John v Dodwell liability was found because of the recipients deemed knowledge that there was a breach of duty by the drawer of the cheques This approach is certainly not one of strict liability While the language of unconscionability was not used we think that it is fair to say that in such situations the conscience of the recipient is so affected that it cannot retain the benefit of the property received 36 Finally in Nelson v Larholt 12 supra a broadly similar case the executor of an estate fraudulently drew cheques on the banking account of the estate to pay for his gambling debts The cheques were signed by the fraudster as G A Potts executor of Wm Burns decd at 340 Relying on Reckitt v Barnett Denning J held at 343 344 The law will therefore compel the defendant to restore the moneys to the estate unless he received the moneys in good faith and for value and without notice of the want of authority He must I think be taken to have known what a reasonable man would have known If therefore he knew or is to be taken to have known of the want of authority as for instance if the circumstances were such as to put a reasonable man on inquiry and he made none or if he was put off by an answer that would not have satisfied a reasonable man or in other words if he was negligent in not perceiving the want of authority then he is taken to have notice of it 37 It therefore seems plain to us that the courts have had no difficulty in imposing liability in appropriate cases if the defendant received payment made by a cheque which was drawn on another s account if there was no clear basis for believing that the payment has been made with authority from the principal 38 Nelson v Larholt was distinguished by Neill J in Feuer Leather Corpn v Frank Johnston Sons 1981 Com LR 251 Feuer Leather and was cited by the Judge below as well as by the respondents in responding to the appellants reliance on the Agency Cheque Cases In Feuer Leather the manager of a company sold various shipments of leather to the defendants in circumstances the plaintiffs alleged that would have drawn attention to the manager s breach of trust In setting out the principles of law applicable Neill J found that the test stated by Denning J had no general application Although Denning J had specified that a defendant would be liable to return the moneys if he was merely negligent this was over stating the threshold of knowledge required because it was in fact not a case of negligence but one with sufficient evidence that the defendant knew of the want of authority Neill J preferred the commonsense position suggested by Lindley LJ in Manchester Trust v Furness 24 supra that constructive notice should not be applicable to commercial transactions Accordingly he held that in transactions between merchants for the disposal of goods only actual notice of the disposal of goods in breach of trust sufficed to make the defendant liable as a constructive trustee The question of whether the defendant had actual notice must be answered by looking at the objective circumstances A person ought to be deemed to have notice if he deliberately turned a blind eye but the court should not expect the recipient of goods to scrutinise commercial documents such as delivery notes with great care nor was there a general duty on the buyer of goods to make inquiries 39 Feuer Leather remains the leading authority on knowing receipt in transactions involving the sale of goods see P S Atiyah and John N Adams The Sale Of Goods Pearson 11th Ed 2005 at p 399 It is not inconsistent with Akindele 23 supra Even though Neill J purportedly rejected reliance on the doctrine of constructive notice in commercial transactions it was clear that he regarded all the objective circumstances as being key to determining if the recipient of goods should be held liable for knowing receipt As is clear from the discussion above the doctrine of constructive notice evolved in relation to transactions in real estate primarily as a means of resolving issues of priority between conflicting proprietary interests and its wider application to other sorts of commercial transactions has always been the subject of vigorous doctrinal debate However since Akindele or more accurately Westpac Banking 26 supra it is equally apparent that our understanding of constructive notice should not be merely limited to its application as narrowly understood in a real estate context Dealings with land are not any more or less commercial in nature when compared to other transactions The main difference is that investigations into title have historically evolved into becoming the settled practice in real estate transactions Indeed it was in this context that the doctrine of constructive notice arose As perceptively noted by Lindley J in Manchester Trust v Furness the primary obstacle to conducting investigations into title in transactions not involving real property is the amount of time available for such checks It will often not make commercial sense to delay a transaction in return for that added certainty in title assuming of course in the first place that this can be practically done However judicial reluctance to expand the scope of liability in this thorny area should not preclude the court s consideration of the objective circumstances and the peculiar practices if any of each type of commercial transaction bearing in mind the need for expediency and certainty in commerce when assessing liability for knowing receipt As astutely noted by Prof David Fox above at 33 the recipient of the property is only expected to act reasonably given the exigencies and the customary practices of the situation in which he works On our part we see no reason not to impose liability even if actual knowledge that a breach of trust had occurred may be missing if all the prevailing circumstances warrant it After all merchants and businesses have a general obligation in law to conduct their businesses with probity 40 For completeness we ought to mention that one species of actual knowledge that was not explicitly analysed in Baden is the failure to infer Harpum 31 supra incisively observes at 122 that The situation visualised here is that of a person who knows all the facts relevant to a given matter but who fails to appreciate their factual or legal significance Correctly analysed this is not a facet of constructive notice but of knowledge because the doctrine of notice is wholly founded on the assumption that a man does not know the facts It is not a failure to inquire that causes the person to be bound or liable but a failure to appreciate or infer Indeed he may be fixed with knowledge of this type even though he inquired as to the legal significance of the facts and was given an incorrect answer by his legal advisers The facts must however necessarily lead to the inference alleged Although this form of knowledge is not frequently articulated examples of it are to be found both in cases on strangers and in other areas of the law emphasis added The article cited as an example of liability in knowing receipt based on a failure to infer Goff LJ s judgment in the case of Belmont Finance Corporation v Williams Furniture Ltd No 2 1980 1 All ER 393 There the company Belmont entered into an agreement with a company City to purchase shares of another company but at the same time secured a loan that was secured on the capital of that same company The arrangement was found to be in breach of the rule against purchasing shares with financial assistance A claim in knowing receipt was made against one of the recipients of the funds dissipated through the arrangement Goff LJ held that the chairman of Belmont knew of the facts which made the arrangement illegal even if he believed it to be a good commercial proposition and had sought legal advice accordingly there was sufficient knowledge attributed to ground liability in knowing receipt 41 With these principles in mind we turn now to the issue of whether the respondents state of knowledge was such that it would be unconscionable to allow them to retain the benefit of the payments Whether the respondents state of knowledge made it unconscionable for them to retain the benefit of the payments 42 Plainly in the

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  • Caltong (Australia) Pty Ltd (fka Tong Tien See Holding (Australia) Pty Ltd) and Another v Tong Tien See Construction Pte Ltd (in liquidation) and another appeal[2002] 3 SLR 241; [2002] SGCA 28
    of sale of 70 Barker Road see 14 above The judge did not believe that Sally bought the Woodward property for her own purposes because inter alia at 78 If Koo did not have enough funds to purchase a larger house it was indeed strange that her husband Tong could then give Sally a loan of A 670 000 for the purchase of 17 Woodward Avenue Further this was the only property in her sole name unlike the others which she had purchased earlier with her husband Being so highly geared financially already what was her purpose in purchasing such a large house at A 1 47m 23 In reaching this conclusion the judge also drew an adverse inference against Sally on account of her reluctance to produce the records of Caltong He viewed the alleged burglary and vandalisation of her accountant s office in Australia see 41 below as mere excuses to avoid having to produce Caltong s records 24 However as regards the sale of No 755 to Alvin the judge found that the disposal was not made with an intention to defraud creditors Moreover the sale was at a price approved by the mortgagee OCBC Bank In any case it would be unjust in all the circumstances to invalidate the transaction as Alvin had borrowed from the bank and taken money from his CPF account to pay for the property 25 In the light of the above the judge made inter alia the following orders 1 that Tong Koo and Angela repay the sum of 53 3m as damages on the ground that a they were guilty of conspiracy to injure by unlawful means and b that they were in breach of their fiduciary duties to TTSC 2 that on account thereof they were constructive trustees in respect of the said sum 3 that Tong Koo and Angela held the four properties developed on No 4 Kew Drive in trust for TTSC and they were to account for the use of these assets 4 Caltong and Sally were constructive trustees in respect of the sum 984 899 60 received from TTSC and were to account for the same and were also constructive trustees in respect of the following properties a No 39A Hydebrae Street Sydney b Stamford Apartment Goderich Street Perth c No 17 Woodward Avenue Sydney Appeal of Caltong and Sally 26 We will first consider the appeal of Caltong and Sally In order to determine whether the orders made against them are or are not too wide it is necessary that we set out their precise terms The eighth and twelfth defendants are 1 to hold the sum of S 984 899 60 paid by the plaintiff as constructive trustees for the plaintiff 2 to account to the plaintiff for the sum of S 984 899 60 including a the use of such moneys which includes details of to whom such moneys were paid when such moneys were paid the quantum of payment and reasons for payment b all properties and or benefits and or assets obtained from the use of such moneys 3 to pay to the plaintiff moneys and all profits and or benefits and or assets including simple interest 4 to hold the following properties as constructive trustees for the plaintiff a 39A Hydebrae Street Sydney b Stamford Apartment Perth and c 17 Woodward Avenue Sydney 3 The twelfth defendant do pay to the plaintiff 25 of the plaintiff s costs in these proceedings 27 At this juncture we would like to make this observation The judge seemed to think that on account of the damages which Tong Koo and Angela were required to pay TTSC because of their conspiracy Tong Koo and Angela were thereby rendered constructive trustees of the same A party may be liable to another for damages on account of a tort the former had committed but that does not render that party a constructive trustee of the same It remains a personal debt 28 We would comment that while the appeal is taken by both Caltong and Sally it is really an appeal by Sally It was never disputed that Caltong received the sum of S 984 899 60 from TTSC Sally s contention is that as she was in control of Caltong only after November 1999 when she became the sole director she should not be made to account for events before that The sum never passed through her hands There was no reason to make her personally liable Furthermore the Woodward property had nothing to do with Caltong She also contends that the order on costs requiring her to bear 25 of the costs of the action is excessive and unreasonable 29 What Sally is basically arguing is that until she became the sole director she was really only a nominee director of Caltong She did not know what was happening there which was effectively being managed by Tong and Angela particularly the latter She did not touch the sum of S 984 899 60 which came into the account of Caltong This aspect of the matter did not appear to have been specifically addressed by the judge below He did not find that when the money was received by Caltong Sally knew that the money was remitted by Tong in breach of trust Neither did he find her guilty of dishonest assistance 30 While the knowledge of Tong and Angela may be imputed to Caltong see HL Bolton Engineering Co v TJ Graham Sons 1957 1 QB 159 1956 3 All ER 624 they being the controlling mind of Caltong there is no evidence to indicate that Sally knew that the money received by Caltong from Tong was improperly siphoned off from TTSC There is also nothing to suggest that Sally dishonestly assisted the Tongs in siphoning money from TTSC 31 To be liable for knowing receipt which would render the recipient a constructive trustee three elements must be proved and in the words of Lord Hoffmann in El Ajou v Dollar Land Holdings 1994 2 All ER 685 at 700 1994 1 BCLC 464 at 478 the plaintiff must show first a disposal of his assets in breach of fiduciary duty secondly the beneficial receipt by the defendant of assets which are traceable as representing the assets of the plaintiff and thirdly knowledge on the part of the defendant that the assets he received are traceable to a breach of fiduciary duty What were missing in relation to Sally are the second and third elements She did not receive the money Neither was it shown that she knew the money received by Caltong was tainted Thus she could not be liable under the principle of knowing receipt even though Caltong by virtue of the knowledge of Tong and Angela would be liable to account for knowing receipt 32 The fact that she agreed to be a nominee director in Caltong did not mean that she had assisted the Tongs in committing a breach of fiduciary duty towards TTSC Sally s duty as a director though nominee was to Caltong not to TTSC The case Selangor United Rubber Estates v Cradock No 3 1968 2 All ER 1073 merely established the principle that just because a person was a nominee director it did not mean that he did not owe a duty of care to the company of which he was a director 33 The elements which must be proved to establish dishonest assistance are see Royal Brunei Airlines v Tan Kok Ming Philip 1995 2 AC 378 1995 3 All ER 97 1 that there has been a disposal of his assets in breach of trust or fiduciary duty 2 in which the defendant has assisted or which she he has procured 3 the defendant has acted dishonestly 4 resulting loss to the claimant 34 There is no evidence that Sally had dishonestly assisted Tong Koo or Angela in siphoning off the funds of TTSC to Caltong In fact she played no role in remitting TTSC s moneys to Caltong She was merely a nominee director of Caltong 35 This association per se could not mean that she would also know what was done by the Tongs as far as siphoning of TTSC s moneys to Caltong was concerned In short there was nothing to implicate Sally to the wrongdoings of the Tongs 36 Accordingly Sally could not be guilty of dishonest assistance or of knowing receipt that the sum was remitted from TTSC to Caltong in breach of trust She should not be held to be personally liable To this extent the order made by the court below would have to be modified Woodward property 37 We now turn to the Woodward property which Sally says the court was wrong to have declared that she held it on trust for TTSC She argues that TTSC had not pleaded anything with regard to this property The pleadings only touched on the 984 899 60 received by Caltong from TTSC Therefore she did not allude to this property or on how she acquired it in her affidavit While this may be so there is considerable weight in the counter argument of TTSC that it did not so plead because it only became apparent in the cross examination of Sally that the Woodward property had been purchased with moneys which originated from TTSC This also explains why when Tong and Koo were giving evidence they were not cross examined by TTSC on this aspect In any case during the crossexamination of Sally TTSC gave notice that it was claiming the property as trust property She was cross examined on it 38 Moreover TTSC had also pleaded that it would claim against any assets which were purchased with the 984 899 60 or their proceeds That should suffice to notify Sally that a tracing was being asked for It would have been easy for Sally to show from the bank records of Caltong that none of the moneys of Caltong were used to purchase the Woodward property It would also have been a matter within her knowledge as to the sources of funds which she had utilised to effect the purchase 39 The judge below came to the conclusion that the sale proceeds of 70 Barker Road which was one of the properties purchased by Caltong from the 984 899 60 remitted by TTSC Tong were probably used to purchase the Woodward property Among the factors which the judge took into account in deciding this question were 1 the Barker Road property was sold in September 1999 for about A 800 000 2 the Woodward property was bought at a time when the Tong family was moving to live in Australia and required a large home 3 it was the only property bought in Sally s sole name whereas her other properties were in the joint names of herself and her husband 4 after the purchase the Tongs were living there allegedly as tenants 5 it was strange that Tong was able and would lend to Sally a sum of A 670 000 to purchase the property when Tong did not have enough money to buy his own house 6 there was no reason why Sally should buy this large house with borrowed money when she was already owing substantial loans in respect of her other properties 40 While an explanation was offered by Sally in respect of each of these points they were not sufficiently persuasive to the judge This being a finding of fact there is hardly any sufficient basis for us to overturn this finding Indeed we agree with it We would add that in making this finding the judge also took into account Sally s conduct at the trial 41 As stated above the Barker Road property was sold for some A 800 000 It would have been a straightforward matter to show where the proceeds had gone Yet there was considerable reluctance to disclose the bank records of Caltong They were eventually not produced because of an alleged burglary at Caltong s accountant s office and the records were reportedly lost as a result The judge felt it was too much of a coincidence On 2 May 2001 he made the order requiring Sally to disclose the records by 8 May 2001 It was on 8 May 2001 that Caltong s counsel informed the court of the burglary which occurred on 4 May 2001 Counsel could not give further details Interestingly Tong s evidence was that the proceeds of the Barker Road property were spent on living expenses during the period of some six months from September 1999 to March 2000 Bearing in mind their financial circumstances then it certainly seemed like a very tall story squandering such a large sum in such a short time 42 In cross examination Sally said that matters relating to the financing of the purchase of the Woodward property were handled by her husband Thava In the circumstances she asserted that TTSC should have called Thava to clarify those matters Yet it did not do so Accordingly Sally submits that TTSC is precluded from contending otherwise now But it is important to note that Thava did not say anything on this in his affidavit at all What he did state was not disputed by TTSC If indeed Thava did possess the relevant information as Sally had asserted then the information should have been set out in a supplemental affidavit of Thava This is a matter exclusively within her knowledge She must go further and get that person to depose to those facts This issue has nothing to do with the principle in Browne v Dunn 1893 6 R 67 which precludes a party from asserting otherwise if he fails to cross examine a witness as to what the latter stated in his affidavit or in his evidence in chief 43 There is another aspect which cast doubts on the credibility of Sally Caltong s counsel tendered to court its tax returns and balance sheets relating to the years 1995 1999 On these documents Caltong s name appeared on the tax assessments in respect of those years But Caltong only took this name on 24 January 2000 Previously it was known as Tong Tien See Holding Australia Pty Ltd Similarly the documents also bore the new address of Caltong s accountants but the accountants only moved to their new offices in 2000 or 2001 Sally was not able to explain these discrepancies Thus there was the suggestion that perhaps Sally fabricated these documents 44 Ordinarily when a trustee mixes trust funds with his own funds the law assumes that the whole is subject to the trust In Frith v Cartland 1865 71 ER 525 at 526 Page Wood VC observed if a man mixes trust funds with his own the whole will be treated as the trust property except so far as he may be able to distinguish what is his own See also Re Tilley s Will Trusts 1967 Ch 1179 at 1182 45 However in the present case while there is no direct evidence to show that in using the proceeds of the Barker Road property to buy the Woodward property Sally knew that the proceeds were tainted we nevertheless find on balance that she did have the knowledge First she denied having used the proceeds of the Barker Road property to purchase the Woodward property Second unlike all her other properties she purchased the Woodward property in her sole name Third she submits tax documents to court which appeared to be fake and she was unable to explain the clear discrepancies see 43 above Fourth her reluctance to produce the records of Caltong All these indicate a guilty mind Thus it appears to us that she had knowingly mixed trust money with her own when purchasing the Woodward property The burden was on her to show which portion of the purchase price came from her own sources and was not tainted by the breach of trust committed by Tong and Angela However having regard to the nature of the pleadings and the manner in which the trial had proceeded in the court below it would probably be fairer if an opportunity be afforded to Sally to show the extent to which she and or her husband had contributed from their own funds towards that portion of the purchase price of the Woodward property in excess of the amount obtained from the sale of the Barker Road property 46 The final point raised by Sally relates to the order on costs She says that even if she were to fail in this appeal the 25 costs awarded against her for the trial is plainly excessive as the points she raised would probably have taken only two days to hear She submits that her role in the whole matter was minor whereas the trial took a total of 39 days 47 From the grounds of judgment it is clear that in arriving at its decision on costs the court below did give careful consideration to Sally s contention that costs awarded against her should be limited The question of costs is a matter of discretion It has not been shown that the judge had erred The court is entitled to take all the circumstances into account in determining the appropriate apportionment as to costs But whether this order on costs should be varied in the light that this appeal would for the reasons indicated above be allowed in part will be dealt with later TTSC s appeal on tracing 48 Although the appeal by TTSC would affect Tong Koo Angela Tong Joo TDPL and Caltong only Caltong is defending it as the other parties are either bankrupt or are being wound up 49 A preliminary point was raised by Caltong that TTSC cannot proceed with this appeal against Tong and Angela without the leave of

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  • Bengawan Solo Pte Ltd and another v Season Confectionery Co (Pte) Ltd[1994] 1 SLR(R) 448; [1994] SGCA 29
    advertising and other materials relating to the purchase sale and distribution of such products 4 Armed with the order the respondents and their solicitors entered the first appellants head office at Harvey Road and the retail outlets at Marine Parade Centrepoint and Tai Thong Crescent and executed the Anton Piller order As a result large quantities of mooncakes and packages carrier bags advertising and other materials such as T shirts posters paper bags brochures documents boxes hanging mobiles plastic containers and banners with the name Season appearing thereon were seized and removed On the following day the respondents and their representatives returned to the first appellants outlet at Tai Thong Crescent and removed a further quantity of 2 500 pieces of mooncakes as they did not have sufficient storage space on the previous day Obviously the large quantity of mooncakes taken away was proving too much of a handful to store and on 5 September 1992 the respondents solicitors wrote to the first appellants solicitors enquiring if the first appellants would agree to the destruction of all the mooncakes with samples to be taken and kept by each party The first appellants solicitors refused and demanded that the Anton Piller order be strictly complied with and that the remaining mooncakes in the first appellants other outlets be removed However the respondents did not proceed to remove them 5 On 8 September 1992 the first appellants applied inter partes for inter alia the following orders namely a that the firm of Season Kedai Kek Dan Roti be added as second defendants to the action b that the injunction and the Anton Piller order be set aside and all the goods and materials seized by the respondents be returned forthwith and c alternatively that the order dated 3 September 1992 be varied 6 The inter partes application was heard before the learned Judicial Commissioner G P Selvam on 10 September 1993 which was the eve of the Eighth Moon Festival The hearing however was not concluded until 12 September 1992 the learned judicial commissioner dismissed the application Subsequently an application was made by the second appellants in their individual names as partners of the firm to be joined as defendants and an order was then made joining them as second defendants to the action 7 The appellants appealed against the order of the learned judicial commissioner made on 12 September 1992 dismissing the application of the first appellants We heard the appeal and allowed it We set aside the order of the learned judicial commissioner and discharged the entire order made on 3 September 1992 We now give our reasons 8 The main issues raised before us were as follows a whether in obtaining the interim injunction and the Anton Piller order the respondents had failed to give full and frank disclosure of all the material facts b whether in the circumstances of the case the Anton Piller order should have been obtained and c whether on the balance of convenience the ex parte injunction should have been continued 9 Counsel for the appellants submitted that the affidavit filed on behalf of the respondents in support of the ex parte application gave the impression that the respondents sold their mooncakes under the brand name Seasons whereas in fact the respondents distributed and sold their mooncakes under the brand name or trade mark Standard and the Chinese characters and the Chinese characters were impressed on their mooncakes The respondents in fact did not use as the brand name or trade mark Seasons or the Chinese characters in their sales of mooncakes On the other hand the trade mark used by the first appellants in relation to their sales of mooncakes was quite different they used the Chinese characters as the brand name or trade mark which were impressed on the mooncakes It was evident from a comparison of the first appellants mooncakes with the respondents mooncakes that the brand names or trade marks used by both of them were different that their packaging of the mooncakes and get up of such packages were also different It was submitted that these differences were material facts which ought to have been disclosed in the affidavit filed in support of the ex parte application and brought to the attention of the learned judge hearing it 10 It was further argued that the respondents sought an injunction to restrain the first appellants from using also the two Chinese characters and that they asserted that the two Chinese characters were the Chinese names of the respondents That was not so The Chinese names of the respondents consisted of five Chinese characters which included the two Chinese characters and the two Chinese characters by themselves were not their names The respondents also failed to disclose that their alleged reputation on the confectionery was in the English word Seasons drawn and presented in a distinct manner They had no reputation and did not claim such reputation in the two Chinese characters in respect of their confectionery 11 On the other hand counsel for the respondents submitted that the claim against the first appellants was for passing off the mooncakes as those of the respondents by the use of the name Season and even if the respondents did not use the Chinese characters in the sale of their mooncakes they would still be entitled to the injunction What they complained of was the passing off of the mooncakes as the respondents mooncakes by the use of the name Season Those facts referred to by the appellants were therefore not relevant or material to the claim 12 Without expressing any views on the question of passing off we are clearly of the opinion that the facts that the respondents were distributing and selling mooncakes under the brand name or trade mark Standard and the Chinese characters that these characters were used and impressed on their mooncakes that the first appellants used the Chinese characters as the brand name or trade mark which

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  • Lim Kim Cheong v Lee Johnson[1992] 2 SLR(R) 688; [1992] SGHC 232
    buyer also pleaded estoppel No amendments were however made to the pleadings to reflect that the action was no longer about the car but about the proceeds of sale I will return to the significance of this later 10 The learned district judge found as a fact that the buyer bought from Billy Tan what he had seen Although the car that the buyer saw bore the same number as the seller s car the learned district judge found that it was not in fact the seller s car that he had seen since it was of a different colour from the seller s car and the seller s evidence was that he had never parted with possession of his car Accordingly the buyer had not purchased the seller s car 11 The district judge went on to consider the buyer s reliance on s 21 of the English Sale of Goods Act 1979 In that context the learned district judge made the following findings a When Billy Tan entered into his agreement with the seller to purchase the seller s car he became its owner b Billy Tan had the seller s authority or consent to sell the car c There was no estoppel even though the seller had handed over the logbook and his identity card to Billy Tan because the buyer had never asked for and was not shown the logbook and the identity card 12 The learned district judge then granted the following reliefs a he granted the declaration sought by the seller that the transfer of motor car EZ 8954 Z from the buyer to the plaintiff was null and void b he ordered that the proceeds of sale of the car be paid by the stakeholders to the seller c he made no order as to interest on the proceeds of sale d he dismissed the counterclaim and e he awarded costs in favour of the seller 13 The buyer now appeals against these orders Although various grounds were advanced in the petition of appeal the buyer s counsel who appeared before me who was not counsel in the court below based his appeal only on three grounds a The learned district judge had no jurisdiction to grant a bare declaration b Since the learned district judge had found that the property in the car had passed to Billy Tan he should not have granted the declaration asked for in any event because the seller was no longer the owner but only had a lien for the unpaid purchase price c The buyer and Billy Tan had made a contract for the sale of the seller s car whether the seller had parted with possession of the car was inconsequential Accordingly the buyer should be entitled to the proceeds of sale 14 I will deal with the last point first because it is the simplest The buyer s counsel sought to argue that it was a proper inference from the evidence that what the buyer had agreed to purchase was not the car that was shown to him but a car bearing the number EZ 8954 Z namely the seller s car This was the only way in which counsel could establish the buyer s rights to the proceeds of sale since he conceded that he did not seek to challenge the finding of the learned district judge that the buyer never saw the seller s car nor did he rely on the ground of estoppel 15 I have no difficulty in rejecting this ground of appeal as the evidence of the buyer did not show that he placed any importance on the registration number of the car as such On the facts it is clear that he was buying the car which he had seen which was not shown to him as a sample but as the actual car he was to purchase 16 After I had indicated to counsel for the buyer in the course of argument that I did not accept this submission he then submitted that his alternative claim for relief in this appeal was that the learned district judge was wrong in granting the declaration and should have dismissed both the claim as well as the counterclaim for the reasons set out in his first two grounds of appeal to which I now turn The power of the District Courts to grant a bare declaration 17 The buyer s counsel s first ground of appeal raises a matter of general interest and importance Although this point was apparently not taken in the court below an objection as to jurisdiction can be taken at any time during the case see Westminster Bank Limited v Edwards 1942 AC 529 Counsel submitted that in general courts have no power to grant a bare declaration unless it is given jurisdiction to do so by statute and referred to Au Poh Weng Lawrence v Tan Huay Lian Annie 1971 1973 SLR R 490 and Tunku Mahmoud bin Sultan Ali v Tunku Ali bin Tunku Allum 1898 1899 5 SSLR 96 In the High Court bare declarations are granted on the authority of O 15 r 16 of the Rules of the Supreme Court 1970 the RSC However there is no equivalent of this rule in the Subordinate Courts Rules 1986 the SCR and he therefore contended that the learned district judge erred in granting the declaration prayed for 18 Counsel for the seller referred me to s 32 of the Subordinate Courts Act Cap 321 the Act which provides Ancillary Jurisdiction A District Court as regards any action within its jurisdiction shall in any proceedings before it a grant such relief redress or remedy or combination of remedies either absolute or conditional and b give such and the like effect to every ground of defence or counterclaim equitable or legal subject to section 24 as ought to be granted or given in the like action by the High Court and in as full and ample a manner 19 He also relied on s 19 2 of the Act which sets out the general civil jurisdiction of the District Courts and submitted that all three conditions set out in that subsection were fulfilled in this case Counsel further pointed out that although there is no direct equivalent of O 15 r 16 of the RSC in the SCR O 1 r 2 4 of the SCR provides In any matter of procedure or practice not provided for in these Rules the procedure and practice for the time being in use or in force in the Supreme Court shall as near as may be be followed and adopted 20 The thrust of counsel s argument was therefore that s 19 2 conferred jurisdiction on the learned district judge to hear this case once he had jurisdiction s 32 empowered him to grant the same relief as a High Court judge could 21 As this is a question of some importance I have had to make my own researches into the matter but have given counsel an opportunity to comment on the further authorities which I have found 22 Before proceeding with my examination of this issue it is necessary to be clear about the ways in which the term jurisdiction is used and abused Unfortunately judges and parliamentary drafters have from time to time used the term jurisdiction to mean both a the authority of a court or judge to entertain an action or other proceeding as well as b the power of the court to grant the particular kind of relief sought See for example the remarks of Diplock LJ in Garthwaite v Garthwaite 1964 P 356 at 387 1964 2 All ER 233 and Oscroft v Benabo 1967 2 All ER 548 at 557 1967 1 WLR 1087 For the sake of clarity in this judgment I will only use the term jurisdiction to mean the authority of a court to hear an action and the term power to refer to the power of a court to grant the relief claimed 23 The distinction between the two concepts has been well pointed out by Ong J in KI Muhiudeen Rawther v KEP Abdul Kassim 1959 MLJ 257 at 258 The Supreme Court of Judicature Act Cap 322 observes this distinction Section 16 and s 17 deal with the civil jurisdiction of the High Court in the sense of authority to hear civil cases and s 18 deals with the powers of the High Court to grant particular reliefs The marginal note for s 32 of the Subordinate Courts Act ancillary jurisdiction is therefore a misleading term because that section really deals with powers and not jurisdiction which is covered by s 19 2 and other sections in Pt IV 24 The argument of the seller s counsel rests strongly on s 32 of the Subordinate Courts Act That section cannot be understood without reference to s 20 which provides Jurisdiction in actions of contract and tort 1 A District Court shall have jurisdiction to try any action founded on contract or tort where the debt demand or damage claimed does not exceed 50 000 whether on balance of account or otherwise 2 A District Court shall have jurisdiction to try any action where the debt or demand claimed consists of a balance not exceeding 50 000 after a set off of any debt or demand claimed or recoverable by the defendant from the plaintiff being a set off admitted by the plaintiff in the particulars of his claim or demand 25 Both ss 20 and 32 have their equivalents in the English County Courts Act 1959 Our s 20 1 is in similar terms to the English s 39 and our s 32 is in similar terms to the English s 74 There is substantial case law on the interpretation of the English s 74 and the net effect of these authorities is set out in Halsbury s Laws of England vol 10 4th Ed 1984 at para 59 A declaration is an ancillary remedy which like an injunction cannot be granted by a county court in the absence of a claim to money or other relief within the court s substantive jurisdiction unless provided for by statute 26 There is a long line of cases establishing this proposition R v Cheshire County Court Judge and United Society of Boilermakers ex parte Malone 1921 2 KB 694 De Vries v Smallridge 1928 1 KB 482 Humber Conservancy Board v Federated Coal and Shipping Co Ltd 1928 1 KB 492 Kenny v Preen 1963 1 QB 499 1962 3 All ER 814 1962 3 WLR 1233 Wong v Beaumont Property Trust Ltd 1965 1 QB 173 1964 2 All ER 119 1964 2 WLR 1325 and Thompson v White 1970 1 WLR 1434 1970 3 All ER 678 See also The County Court Practice 1983 at p 26 27 The interpretation given to the English s 74 by the courts has been criticised by Dr Itzhak Zamir in The Declaratory Judgment 1st Ed 1962 at pp 304 307 but it appears too well entrenched to be capable of challenge 28 In all these cases however the courts have discussed the interpretation of s 74 of the County Courts Act not in isolation but in relation to other sections of that Act The reason for this is explained by Dr Itzhak Zamir in his book at pp 300 301 The jurisdiction of the county court is wholly statutory Hence the question whether declaratory relief may be granted by these courts is to be answered by reference to statutory provisions Among the relevant provisions however there is none which expressly states as O 25 r 5 equivalent to O 15 r 16 of the Singapore RSC does in respect of proceedings in the High Court that pure declaratory relief is available in county courts The answer therefore is to be given by interpretation of the provisions prescribing the jurisdiction of these courts 29 For this reason since s 74 is not a section which confers jurisdiction as such on the County Courts but is a section which prescribes the powers of the courts it can only be invoked where the action is otherwise within the jurisdiction of the county courts There is no rule that a bare declaration as such cannot be granted by a county court Where a county court otherwise has jurisdiction by virtue of another section of the County Courts Act it may grant the declaratory relief even if that is the only relief claimed see for example Gascoigne v Gascoigne 1918 1 KB 223 and Re Thomas deceased Davies v Davies 1949 1 All ER 1048 1949 P 336 see also Halsbury s Laws of England 4th Ed 1984 vol 10 para 59 footnote 1 In the cases where declaratory relief has been denied in the County Courts these denials were where there was no claim falling under another section of the County Courts Act conferring jurisdiction or where the court felt that the prayer for a declaration was not truly ancillary to such a claim 30 In Singapore the jurisdiction of the District Courts is likewise wholly statutory The main difference between the jurisdiction of the District Courts and that of the English County Courts is that there is no English equivalent of s 19 2 of the Subordinate Courts Act which provides General civil jurisdiction 2 Subject to the provisions of this Act and any other written law which relate to the limitation of the civil jurisdiction of a District Court a District Court shall have jurisdiction to try all civil proceedings where a the cause of action arose in Singapore b the defendant or one of several defendants resides or has his place of business or has property in Singapore or c the facts on which the proceedings are based exist or are alleged to have occurred in Singapore emphasis added 31 This appears at first sight to be a self sufficient section conferring original civil jurisdiction on District Courts in Singapore subject only to the limitations mentioned in italics This section is substantially similar to s 16 1 of the Supreme Court of Judicature Act except that a unlike the High Court District Courts do not have power to try proceedings relating to land and b the jurisdiction of District Courts is limited by the other provisions of the Subordinate Courts Act and any other written law 32 Thus an argument can be made that unless a statutory provision can be found which limits the jurisdiction of the District Courts they will have jurisdiction to try any civil proceedings where any of the three conditions set out in s 19 2 is satisfied This was in effect the argument put forward by counsel for the seller although not quite in those terms and I must now develop this argument and examine it critically Although this was not a point made by counsel this argument means that s 20 of the Subordinate Courts Act and the other sections in Pt IV referring to monetary limits on jurisdiction are not to be treated as provisions conferring jurisdiction but rather as provisions limiting jurisdiction 33 For the sake of clarity and convenience I will divide the sections in Pt IV which deal with the original civil jurisdiction of District Courts into two classes a ss 20 21 25 28 29 30 and 31 which I will call the primary jurisdiction sections as they set out monetary limits for specific classes of actions and b ss 22 23 24 3 26 and 27 3 which I will call the additional jurisdiction sections as they allow District Courts to hear cases not otherwise falling within the primary jurisdiction sections 34 The primary jurisdiction sections appear to confer jurisdiction on District Courts up to specified financial limits but should on the foregoing argument be construed as provisions which in fact limit jurisdiction In other words the first inquiry as to jurisdiction will be to ask whether one of the conditions in s 19 2 is satisfied If so the next inquiry will be to ask whether the action is one of contract tort or any of the other classes of action mentioned in the primary jurisdiction sections If so the jurisdiction of the District Courts will be governed by the financial limits set by those sections If not a District Court will have jurisdiction to hear the case without financial limits on its powers The additional jurisdiction sections merely extend the limits contained in the primary jurisdiction sections in exceptional circumstances 35 On this basis s 32 of the Subordinate Courts Act could then be read somewhat differently from s 74 of the County Courts Act It could be argued that so long as the case before a District Court is not one to which any of the primary jurisdiction sections of Pt IV would apply to exclude the jurisdiction of a District Court it will have jurisdiction to hear the action and in such case it may pursuant to s 32 grant the same reliefs that the High Court could grant in an equivalent case It cannot be doubted that the High Court has power to grant a bare declaration in an appropriate case the authority for this being generally accepted as O 15 r 16 of the RSC see Guaranty Trust Company of New York v Hannay Company 1915 2 KB 536 Accordingly District Courts would likewise have power to grant a bare declaration 36 This approach has the attraction of consistency of interpretation between s 19 2 of the Subordinate Courts Act and s 16 1 of the Supreme Court of Judicature Act This is however not an interpretation which has been commonly accepted in the past as the general view in the legal profession appears to be that even if one of the conditions in s 19 2 is satisfied District Courts will only have jurisdiction if the case falls within one of the primary or additional jurisdiction sections in Pt IV If the broad ranging interpretation that I have suggested for s 19 2 is to be adopted the practical consequences are that a District Court would have jurisdiction to hear any class of case which is not specifically mentioned in Pt IV Furthermore in those cases it would by virtue of s 32 have no financial or other limits on its jurisdiction so that it could award monetary relief in excess of 50 000 The following classes of cases might be examples by no means exhaustive where District Courts would have such unlimited jurisdiction a actions in quasi contract b actions for infringement of trade mark rights or breach of copyright unless such actions are to be regarded as claims in tort within the meaning of s 20 1 c actions for damages for breach of trust or fiduciary obligation or breach of confidence unless such actions are also to be treated as claims in tort d actions to enforce foreign judgments at common law e actions for repayment of moneys procured by undue influence and f other claims for compensation based on equitable rights 37 These are all cases where there are no express limitations placed on the jurisdiction of the District Courts by any provision of the Subordinate Courts Act or of any other written law Therefore on the interpretation I have postulated so long as the requirements of s 19 2 are satisfied a District Court will have jurisdiction to hear the case and may under s 32 grant all such reliefs as the High Court is empowered to grant Indeed taken to its logical conclusion this interpretation would even allow the District Courts unlimited jurisdiction to hear claims for certiorari mandamus and prohibition if the requirements of s 19 2 are satisfied 38 Such a situation would of course result in duplicity of jurisdiction between the High Court and the District Courts in the examples I have given although this problem could possibly be overcome by liberal use of the procedure for transfer of a District Court action to the High Court under s 39 of the Subordinate Courts Act However the real anomaly of such a situation would be that the District Courts would for no apparent logical or practical reason have unlimited monetary and other powers in certain classes of cases which are generally more complex than the cases falling within the primary jurisdiction sections 39 On a consideration of the structure of the Subordinate Courts Act as a whole particularly Pt IV it seems to me that it was not the intention of the drafter to create such a radical difference between the jurisdiction of the District Courts and that of the English county courts If this had been so intended I believe that clearer language would have been used and we would not have been put in a situation where to give s 19 2 its literal meaning would result in the District Courts having jurisdiction in so many cases involving sums well over 50 000 for no apparent reason 40 I am fortified in this belief by my analysis of the recent history of the civil jurisdiction of the District Courts and I have been assisted in this analysis by Associate Professor Leong Wai Kum s article The High Court s Inherent Power to Grant Declarations of Marital Status 1991 SJLS 13 Although the jurisdiction extends as far back as the beginning of the century the terms in which this jurisdiction was expressed have been fairly consistent up till the enactment of the present Subordinate Courts Act in 1970 Immediately prior to that enactment the jurisdiction of the District Courts was found in s 58 1 of the Courts Ordinance Cap 3 1955 Ed which provided Civil Jurisdiction of District Courts Subject to the other provisions of this Ordinance a District Court shall when presided over by a District Judge have jurisdiction to try all original actions and proceedings of a civil nature of which the amount in dispute or value of the subject matter does not exceed one thousand dollars Provided that a the cause of action has arisen either wholly or in part within the Colony or b the defendant or any one of the defendants at the time of institution of the action or suit ordinarily resides or carries on business or personally works for gain within the Colony 41 Section 67 of the same Ordinance provided that District Courts would have no jurisdiction in actions for declaratory decrees except in interpleader proceedings 42 The following points will be noted about the Courts Ordinance a section 58 1 brought together in one provision all the conditions precedent for jurisdiction b section 58 1 comprised two parts the first setting out the financial limits of the District Courts jurisdiction and the second setting out the necessary connection with Singapore to justify invoking the jurisdiction of the District Courts c the first part extended the civil jurisdiction of the District Courts to all kinds of civil proceedings subject only to the financial limit of 1 000 and I will call this element the financial limits unlike the present statute which appears to give jurisdiction only in certain classes of cases and also subject to fixed financial limits d the second part was drafted in broadly similar terms to s 19 2 of the present statute and I will call this element the geographical connection and e section 67 made it plain that no declaratory relief could be granted on any basis except in interpleader proceedings 43 It is therefore clear that if the seller s claim had been brought under the Courts Ordinance he would have been denied relief 44 These sections remained in force during the period that Singapore was part of Malaysia with some minor amendments being made The Ordinance itself was renamed the Subordinate Courts Ordinance when the other parts of the Ordinance were repealed and new legislation for the superior courts in Singapore was enacted in the form of the Malaysian Courts of Judicature Act 1964 The Subordinate Courts Ordinance was eventually replaced by the present statute enacted as the Subordinate Courts Act 1970 when s 19 2 and the primary and additional jurisdiction sections emerged in their present form albeit with lower monetary limits 45 Without actual knowledge of how the present statute came to be drafted I can only surmise that the drafter decided to use the English County Courts Act as a model for what was going to be the first statute to be drafted dealing exclusively with the jurisdiction and powers of the Subordinate Courts This is apparent from the primary and additional jurisdiction sections in Pt IV which generally speaking follow closely the wording of the equivalent sections of the County Courts Act However as the Supreme Court of Judicature Act had been enacted in 1969 with s 16 as the general jurisdiction conferring section the drafter presumably thought it sensible to engraft a version of that section onto the English model possibly to fulfil the same function as the proviso to the old s 58 1 namely the geographical connection It certainly appears from a comparison of the Courts Ordinance and the Subordinate Courts Act that the drafter of the latter was trying to keep the necessary elements for the jurisdiction of the district courts broadly similar to what they had been in the Ordinance by retaining the dual elements of a financial limits and b geographical connection which were both present in the Courts Ordinance the new Act might therefore be regarded as a refinement of the old regime 46 Against that background I feel that I am able to invoke the well known presumption that a statute does not create new jurisdictions or enlarge existing ones and express language is required if a statute is to be interpreted as having this effect see Maxwell Interpretation of Statutes 12th Ed 1969 at p 159 I concede that I may be stretching the presumption somewhat since the language of the Subordinate Courts Act is quite different from that of the Courts Ordinance and the presumption is usually applied to superior rather than inferior courts see Craies Statute Law 7th Ed 1971 at p 122 However I cannot imagine that the drafter or the Legislature intended to replace s 58 1 containing the dual elements of financial limits and geographical connection by s 19 2 containing only the geographical connection as the sole criterion for jurisdiction independently of the other primary jurisdiction sections in Pt IV containing the financial limits It is much more likely that he was trying to do in two or more sections what the Courts Ordinance had done in one unfortunately he did not realise that he could not make fried eggs out of an omelette In fact the whole structure of Pt IV is more restrictive in terms of jurisdiction than the Courts Ordinance because the primary jurisdiction sections are selective in terms of subject matter whereas s 58 1 granted District Courts jurisdiction to hear every kind of civil proceeding the only limitation being the amount claimed or the value of the subject matter in dispute There is therefore no reason to suppose that the Act was intended significantly to enlarge the jurisdiction of the District Courts 47 The only reason for arguing that the primary jurisdiction sections in the Subordinate Courts Act should be construed differently from the equivalent sections in the County Courts Act is the effect of s 19 2 of the Subordinate Courts Act Let me now examine the problem with regard to s 19 2 Section 16 1 of the Supreme Court of Judicature Act is usually regarded as the general source of authority for the High Court to try civil cases apart from the other more specific provisions of ss 16 and 17 In any dispute as to the jurisdiction of the High Court to try a particular civil case if the case falls within s 16 1 there will be no need to rely on any other provision If a similar interpretation were to be given to s 19 2 of the Subordinate Courts Act subject to the financial limits for those classes of cases mentioned in the primary jurisdiction sections it would result as I have observed in cases apparently falling within the jurisdiction of the District Court which could not have been contemplated by the Legislature On the other hand if apart from s 19 2 the other provisions of Pt IV are to be regarded as sections conferring jurisdiction and not limiting it then what effect is to be given to s 19 2 48 It seems to me that however unsatisfactory this may prove in terms of logic and consistency s 19 2 must be treated as a necessary but not a sufficient condition precedent for jurisdiction In other words one of the conditions in s 19 2 must be satisfied for a district court to have jurisdiction but even if the case falls within s 19 2 it will also have to fall within one of the primary or additional jurisdiction sections in Pt IV which would therefore have to be treated as sections conferring jurisdiction rather than as sections limiting it in order that a District Court may be seised of the case Such an interpretation may appear illogical and inconsistent but I can offer three arguments in support of preferring such an interpretation a The High Court is a superior court whereas a District Court is an inferior court No matter is deemed to be beyond the jurisdiction of a superior court unless it is shown to be so while nothing is within the jurisdiction of an inferior court unless it is expressly shown on the face of the proceedings that the particular matter is within the cognizance of the particular court see Halsbury s Laws of England vol 10 4th Ed at para 713 The rules of interpretation of the jurisdiction of a superior court are therefore somewhat different from those of an inferior court b The fact that the primary jurisdiction sections in Pt IV have followed the wording of the equivalent sections in the English County Courts Act so closely suggests that the true intention of the Legislature was that the primary jurisdiction sections in the Subordinate Courts Act should be construed in the same way as their English counterparts and it is clear that the English sections have always been interpreted as sections conferring jurisdiction c The history of the legislation enables me to invoke the presumption against enlargement of jurisdiction particularly where to do so would raise even greater illogicality and inconsistency than if I were to adopt a common interpretation for s 16 1 and s 19 2 49 I have considered a third possible interpretation of Pt IV This would be to regard s 19 2 as the sole section setting out the necessary requirements for District Courts to assume jurisdiction and the primary and additional jurisdiction sections would then be regarded as sections setting out the powers of the district courts in cases where there is jurisdiction under s 19 2 If therefore cases arose where s 19 2 could be satisfied but the case was not one coming within the primary or additional jurisdiction sections for example actions in quasi contract or for equitable compensation a District Court would theoretically have jurisdiction to hear the case but no power to grant any relief which would effectively mean that such cases could not be heard by district courts I do not think that this is a viable interpretation for the following reasons a The primary and additional jurisdiction sections are explicit in their use of the term jurisdiction shall have jurisdiction to try any action and to read them as sections dealing with powers would require considerable distortion of language b The primary and additional jurisdiction sections follow closely the wording of equivalent sections in the County Courts Act which have always been construed as sections dealing with jurisdiction and not powers c If the primary and additional jurisdiction sections are to be regarded as dealing with powers then they would conflict with s 32 and indeed be redundant by reason of that section Section 32 clearly deals with powers and states unequivocally that where a District Court has jurisdiction it has all the powers of the High Court without limitation If jurisdiction is determined solely by s 19 2 and s 32 gives District Courts all the powers of the High Court what need would there be for the primary and additional jurisdiction sections 50 Having regard to the foregoing analysis I would readily agree that Pt IV of the Subordinate Courts Act should be redrafted for clarification However I believe that in all the circumstances I would be in tune with the intention of the Legislature in holding that the civil jurisdiction of the District Courts requires a two fold test namely that a case must fall not only within s 19 2 but also within another section in Pt IV conferring jurisdiction namely one of the primary or additional jurisdiction sections In other words as in the Courts Ordinance the case must meet both the geographical connection and the financial limits before a District Court can have jurisdiction 51 It follows from this that I ought to apply the same interpretation given to s 32 as has been given to s 74 of the English County Courts Act namely that there can be no claim for a bare declaration unless it is ancillary to some other monetary or other claim falling properly within the jurisdiction of the District Courts Although it is not disputed that the requirements of s 19 2 have been met in this case since the plaintiff claimed no relief which would otherwise have come within a section in Pt IV conferring jurisdiction other than s 32 I conclude that the declaration should not have been granted 52 The seller s position is not improved by his second claim which was abandoned at trial for an order for rectification of the Register in the Registry of Vehicles This order could not in any event have been granted since there is no provision for such an order in the Road Traffic Act Cap 276 there being no equivalent in that statute of s 143 of the Land Titles Act Cap 157 53 Counsel for the seller in a fall back argument submitted that the seller s claim was capable of being treated as a latent claim for damages for conversion so as to make his claim for a declaration ancillary to a claim falling within one of the primary jurisdiction sections presumably s 20 1 citing Goh Lam Wah v Elsa Yeo 1981 2 MLJ c I cannot agree with this submission since there was in fact no claim for damages and as Lord Denning MR said in Wong v Beaumont Property Trust Ltd 26 supra at 182 It is the nature of the claim which founds the jurisdiction not the result of the case Should the declaration have been granted 54 However in the event that I am wrong in this interpretation I now turn to the second ground of appeal which is that even assuming that the court could have granted a declaration the learned district judge should not have done so in the circumstances of this case In this respect I believe that the buyer s counsel has raised an issue which was not appreciated by the parties below If as the district judge found title had passed from the seller to Billy Tan then the position of the seller became that of an unpaid seller with a lien over the property for the unpaid balance of the purchase price pursuant to s 39

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  • Salijah bte Ab Latef v Mohd Irwan bin Abdullah Teo[1995] 3 SLR(R) 233; [1995] SGHC 216
    to comply with the aforesaid order the Registrar of the Supreme Court be empowered and do execute all such documents as are necessary on behalf of and in the name of the husband to effect the transfer to the wife 5 The wife s solicitors managed to contact the husband and on 16 January 1995 he accepted service of the summons and supporting affidavit outside the High Court building The matter first came on for hearing on 21 January 1995 The husband appeared in person and told me that he had not been in the Syariah Court when the order regarding the transfer of the property was made and that he had only learned about this order when informed of it by the Legal Aid Bureau He indicated that he wanted to instruct counsel in order to contest the summons I therefore adjourned the matter for one month 6 At the next hearing on 24 May 1995 the husband again appeared in person He informed me that he had been to see the Syariah Court and had been advised to get a lawyer He then had seen two Muslim organisations which unfortunately had been unable to help him and he was not able to afford a lawyer He still wished to contest the application 7 I had been aware since the first hearing of the application that there were possible jurisdictional and other legal difficulties in the way of the wife Whilst I had given an order similar to that sought by her in a previous matter in that prior case the defendant had not attended the hearing or made any form of objection to the order requested In this case however since the husband was actively opposing the wife s application and since I harboured some doubts as to the correctness of my prior order I thought that the matter should be explored in some depth As the husband was obviously unable to deal with the somewhat complex legal arguments involved I decided that it was an appropriate case for the appointment of an amicus curiae 8 At the next hearing I had the benefit of the meticulous and detailed research and analysis of Ms Choi Yok Hung the amicus curiae After considering the arguments put forward by Ms Yeo on behalf of the wife and the research and contentions of Ms Choi I dismissed the application My reasons are set out below 9 The Syariah Court first established by the Muslims Ordinance 1957 is now governed by the Administration of Muslim Law Act Cap 3 AMLA This is the statute which lays down the jurisdiction of the Syariah Court and which sets out the powers which that court has to enforce the orders made by it Under s 53 of AMLA the Syariah Court has power to fine or imprison any person who fails or neglects to comply with an order which it has made under s 52 Among the orders which can be made pursuant to s 52 is an order relating to the disposition or division of property on divorce 10 The wife in the present case therefore had the option when the husband failed to effect the transfer of his interest in the flat to her to make an application to the Syariah Court for an enforcement order under s 53 She did not do so I understand that in fact very few persons if any at all have asked the Syariah Court to invoke its powers under that section That court apparently and my information may be wrong or incomplete has never used its enforcement powers due to a lack of manpower and facilities available for this purpose 11 Instead the wife by this application sought the assistance of the High Court The reason why the wife and others before her in a similar position took this course is the existence of s 14 1 of the Supreme Court of Judicature Act Cap 322 SCJA That section provides as follows If a judgment or order is for the execution of a deed or signing of a document or for the indorsement of a negotiable instrument and the party ordered to execute sign or indorse such instrument is absent or neglects or refuses to do so any party interested in having the same executed signed or indorsed may prepare a deed or document or indorsement of the instrument in accordance with the terms of the judgment or order and tender the same to the court for execution upon the proper stamp if any is required by law and the signature thereof by the Registrar by order of the court shall have the same effect as the execution signing or indorsement thereof by the party ordered to execute 12 This power of the High Court is commonly resorted to in situations where a divorce having been granted by the High Court one party subsequently fails to comply with a High Court order to transfer certain property to the other There is no equivalent of this section in AMLA which is why applications under s 14 1 have been made by Muslims seeking to enforce a Syariah Court order 13 Rahimah bte Hussan v Zaine bin Yusoff 1995 1 SLR R 239 was one such case The judge there dismissed the application on the basis that the plaintiff in that case should not have sought the assistance of the High Court because she could have got a similar remedy from the Syariah Court He took the view that the Syariah Court has the power to make the kind of orders provided for by s 14 1 of the SCJA His Honour referred to the powers of imprisonment and fining under s 53 of AMLA and concluded that the greater power to dispose of and divide property on divorce to interfere with liberty and to seize property to enforce a court order must include the lesser power to sign documents 14 With due respect I am unable to agree with the reasoning and conclusion in Rahimah s case In Singapore the Syariah Court is a creature of statute Its jurisdiction and powers flow solely from enacted law Any powers that it has must be spelt out specifically either in AMLA itself or in other legislation It is not possible to imply powers which are not so expressed simply because the powers which one seeks to imply may have a less significant impact on the freedom or property of the person affected than the powers which have actually been granted to the Syariah Court No doubt if the problems which many beneficiaries of Syariah Court orders now face in making such orders effective had been anticipated in 1961 when the court was given the power to dispose of or divide property upon divorce it would not have been difficult to have inserted in the statute as well a power similar to that conferred on the High Court by s 14 1 of the SCJA This was not done however and it is not for this court to endow the Syariah Court with powers which Parliament has not given it If it is felt that the Syariah Court needs additional powers Parliament is well able to remedy the deficiency My reasons for dismissing this application therefore were not the same as those which applied in Rahimah bte Hussain s case 15 It appeared to me that the application had been framed in the way it was in order to overcome a problem with s 14 1 of the SCJA That section applies to a judgment or order for the execution of a deed or the signing of a document The wife s solicitors obviously took the view with which incidentally I agree that the words judgment or order meant a judgment or order of the High Court and could not be extended to include a judgment or order of the Syariah Court Accordingly if they had simply asked the High Court to empower the Registrar to sign on behalf of the husband such documents as were necessary to give effect to the Syariah Court s order they faced being met with a rejection of their application on the basis that s 14 1 did not apply to Syariah Court orders To overcome that difficulty the first prayer in the originating summons was a prayer for a declaration as to the ownership of the flat The following prayers could therefore be described as consequential and proper for the enforcement of the order given pursuant to the first prayer which order would be an order of the High Court I therefore had to consider whether it was an appropriate case for a declaration to be made 16 The power of the High Court to make a declaratory order is derived from para 14 of the First Schedule to the SCJA The extent of this power is indicated by O 15 r 16 of the Rules of the Supreme Court which provides that the court may make binding declarations of right whether or not any consequential relief is or could be claimed This does not mean however that the court must in all cases where a declaration is asked for if it finds the facts on which the application is based to be correct grant the declaration requested As the Supreme Court Practice 1995 Ed makes clear there are several factors which have to be considered before a declaration may be granted The following observations of such factors as are relevant to the present case are culled from paras 15 16 1 to 15 16 4 of the Supreme Court Practice 17 Firstly the jurisdiction of the court to make a declaration of right is confined to declaring contested legal rights subsisting or future of the parties represented in the litigation Secondly the remedy being a discretionary one it will not be granted to a plaintiff if it would not give him relief in any real sense ie relieve him from any liability or disadvantage or difficulty Thirdly the power to make a declaratory judgment is confined to matters which are justiciable in the High Court Finally it has been held that there is nothing in O 15 r 16 which enables the court to make a declaration in a matter in which its jurisdiction is excluded by a statute which gives exclusive jurisdiction to another tribunal 18 It appeared to me that the requirement of a justiciable right was one of paramount importance Did the plaintiff have such a right in the present case I did not think so Prior to her divorce she had had the right as a Muslim married under Muslim law to go to the court of competent jurisdiction the Syariah Court to ask it to grant her a divorce and if it decided to do so to further request it to exercise its power to dispose of the property owned jointly by herself and the husband She exercised this right and as a result not only was the divorce granted but the husband was ordered to transfer the property to her What justiciable right remained thereafter with the wife and what was there for the High Court to do The wife already had the order she wanted There was no necessity for the High Court to make such an order again even if it had the jurisdiction to do so Further bearing in mind that the order was made by another court of competent jurisdiction and therefore that the High Court was bound to accept it as determining the rights of the parties to the property it appeared to me that it would be farcical if I presumed to confirm the Syariah Court order by making the declaration sought 19 When a declaration is asked for there must be some ambiguity or uncertainty about the issue so that the court s determination will have the effect of laying such doubts to rest In the present case there was no uncertainty over what the wife s rights were she was entitled upon refunding certain moneys to the husband s account with the Central Provident Fund to have the property transferred to her This being the case the High Court declaration could not in fact give her anything more than she already had As such there really was no justiciable issue for the High Court to decide in relation to the declaration Furthermore as the declaration would not have given the wife relief in any real sense the proper exercise of the court s discretion was to refuse to make the declaration 20 Miss Choi also submitted that it would be unprecedented for the High Court to make a declaration about the rights of a party under an order made by another judicial tribunal of competent jurisdiction Whilst she was unable to find any authority dealing with the issue a lacuna which is not surprising given the scarcity of common law territories operating two separate judicial systems aimed at different segments of the population each with its own court I accepted her submission that on the basis of public policy it would not be right to do as the wife had asked By granting the declaration asked for the High Court would in effect be saying that the Syariah Court s order was valid Quite apart from the presumption of such a stand its danger would be the implication that the High Court s intervention was needed to establish the validity of a Syariah Court order This implication would unnecessarily undermine the standing of the Syariah Court and would be antithetical to the aim of Parliament which was to set up a court so that Muslim personal law could be administered to Muslims completely outside the court system established by the SCJA which applied laws arising or developed from the English common law The further problem that arose was that asking the High Court to confirm a valid order of another court was in effect taking away the discretion which the court was supposed to have in the granting of declaratory relief and turning the High Court into a rubber stamp In my view these points served to confirm that the wife did not possess any justiciable right upon which the High Court could make a declaratory order 21 Ms Yeo relied on Barnard v National Dock Labour Board 1953 2 QB 18 in which she submitted the English Court of Appeal held that in proper cases where persons would otherwise be without a remedy for an injustice the English High Court had a discretionary power to intervene by way of declaration and injunction in the decisions of statutory tribunals In Barnard s case however the basis of the court s intervention was that the quasi judicial tribunal which made the decision did not have the competence to make the orders that it did The very basis of the present application was the diametrically opposite situation It was common ground that the Syariah Court had made a valid order well within the powers given to it The last thing the wife here wanted to do was to impugn the validity of that order 22 A further difficulty which the wife faced in asking the court for declaratory relief arose from the doctrine of res judicata As The Doctrine of Res Judicata 2nd Ed by Spencer Bower and Turner at para 422 explains res judicata works in two ways First it estops the parties from afterwards controverting any question or issue decided by a court of law and secondly it bars the party who has obtained relief thereby from receiving again the same relief against the same party Bower and Turner state the rule as follows para 423 any person in whose favour an English judicial tribunal of competent jurisdiction has pronounced a final judgment whether civil or criminal is precluded from afterwards recovering before any English tribunal a second judgment for the same civil relief on the same cause of action or a second judgment of conviction for the same offence against the same party 23 According to Bower and Turner judges have given varying theoretical justifications for this doctrine One justification the public policy justification is that the general interest of the community in the speedy and final termination of disputes between litigants demands the imposition and rigid observant of such a rule The second theory deals with the interest of the individual litigant in having matters finally settled The third justification the merger doctrine is that any cause of action which results in a judgment of a judicial tribunal whereby relief is granted to the plaintiff or other actor in the proceedings is in contemplation of law merged in the judgment as soon as it is pronounced and thereby loses its individual vitality and disappears as an independent entity any judgment even of the lowest degree being regarded as of a higher nature than any even the most important cause of action 22 supra at para 427 24 In my judgment it would not have been right for me to have exercised my discretion in favour of the wife and granted her the declaration asked for when the effect of doing so would have been to redetermine an issue which had already been decided by a Singaporean judicial tribunal of competent jurisdiction I could not disregard the doctrine of res judicata simply on the basis of sympathy for the position in which the wife found herself In any case I was impressed by the argument that the wife s rights to relief had been merged in the order issued by the Syariah Court That being the case those rights could not be resurrected in another tribunal under the guise of a declaratory order In the language of Bower and Turner the wife s cause of action had merged into the Syariah Court order as soon as it was pronounced and had disappeared as an independent entity This

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  • Cheong Yoke Kuen and others v Cheong Kwok Kiong[1999] 1 SLR(R) 1126; [1999] SGCA 27
    to pay all the outgoings of the flat until March 1998 when the present dispute as to the ownership of the flat arose between him and his siblings By the Originating Summons No 694 of 1998 filed on 9 June 1998 the appellants sought the following reliefs against the respondent 1 a declaration as to the beneficial interest of the parties in the flat 2 an order that the flat be sold at a price not below the market value or at such price as the court deems fit and 3 an order that the respondent do execute all necessary documents and take such steps as may be necessary to bring the sale of the flat into effect Decision below 6 As a preliminary point the learned judge noted that the appellants had oddly chosen to ground their action under s 18 2 of the Supreme Court of Judicature Act Cap 322 SCJA She held that there is no provision in the First Schedule of the SCJA which empowers the court to grant the orders which the appellants sought 7 Leaving aside the procedural irregularity the learned judge declined to make the declaration as she was of the view that the appellants claim for a share in the flat was untenable at law and was wholly unsubstantiated Notwithstanding the fact that the respondent had transferred his legal interest in the flat she held that he continued to retain a beneficial interest in the flat by virtue of his having paid the entire purchase price and the outgoings of the flat Despite her earlier reservations over the procedural irregularities the learned judge ordered the respondent to take the necessary steps to effect a sale of the flat at a price not below the market value The appeal 8 The first issue raised in this appeal is whether the court has the power under the SCJA to make the orders sought by the appellants We turn first to s 18 of the SCJA which provides as follows 1 The High Court shall have such powers as are vested in it by any written law for the time being in force in Singapore 2 Without prejudice to the generality of subsection 1 the High Court shall have the powers set out in the First Schedule 3 The powers referred to in subsection 2 shall be exercised in accordance with any written law or Rules of Court relating to them Paragraphs 2 and 3 of the First Schedule are set out in full below 2 Power to partition land and to direct a sale instead of partition in any action for partition of land and in any cause or matter relating to land where it appears necessary or expedient to order the land or any part of it to be sold and to give all necessary and consequential directions 3 Power to order land to be charged or mortgaged as the case may be in any case in which there is jurisdiction to order a sale emphasis added 9 The appellants argue that para 2 of the First Schedule gives the court the power in any cause or matter relating to land where it appears necessary or expedient to order the land or any part of it to be sold and to give all necessary and consequential directions It is therefore submitted that the court has the power to make a declaration as to the beneficial ownership in the flat as para 2 allows the court to give all necessary and consequential directions These submissions are not seriously contested by the respondent in the appeal 10 In our opinion the learned judge with respect erred in concluding that the SCJA does not confer the power on the court to make declaratory orders or to order the sale of the flat As this is a cause or matter relating to land para 2 of the First Schedule does confer a power on the court to order a sale of the flat where it appears necessary or expedient Paragraph 14 of the First Schedule also empowers the court to grant all reliefs and remedies at law and in equity which includes the power to make a binding declaratory order Salijah bte Ab Latef v Mohd Irwan bin Abdullah 1996 2 SLR R 80 Ownership in the flat 11 We now come to the essence of this appeal The appellants claim that the mother was the owner of the flat and upon her death it forms part of her estate to which they are each entitled in equal shares together with the respondent pursuant to the rules of distribution under the Intestate Succession Act Cap 146 The respondent however claims that he is the beneficial owner of the flat by operation of a resulting trust because he had paid the purchase price for the flat as well as its outgoings When he transferred his entire interest in the flat to the mother in 1986 no consideration was paid to him by the mother and he did not intend to make a gift of that flat to her Thus the beneficial ownership of the flat remained with him by operation of a resulting trust 12 The position in equity as to the ownership of a property by a person who has contributed any money towards purchase thereof is well settled Where a person has paid the purchase price of a property the purchaser and the property is conveyed or transferred to him jointly with others or to one or more persons other than the purchaser a resulting trust arises in favour of the purchaser and he is the beneficial owner of the property Dyer v Dyer 1788 2 Cox 92 If there are more than one purchaser and they paid the purchase money in unequal shares the beneficial interest acquired by each of them will be in proportion to their respective contributions Such a resulting trust is based on the presumed intention of the parties and such presumption is rebuttable by evidence of an intention on the part of the purchaser to make a gift or by the presumption of advancement which arises when a voluntary conveyance or transfer is made to a person to whom the purchaser stands in loco parentis 13 Hence in the instant case if the flat were not an HDB property the position would be abundantly clear Whatever purchase money that had been paid for the flat had been paid solely by the respondent Thus at the time when the flat was purchased and registered in the joint names of the mother and the respondent a resulting trust of the property arose in favour of the respondent as he had provided the entire purchase money and he was the beneficial owner of the flat There was no evidence that by taking the property jointly with the mother the respondent intended to make a gift of half or any share of the flat to the mother Also there was in such a case no presumption of advancement arising in favour of the mother to displace the presumption of resulting trust At the time when the respondent transferred his entire interest in the flat to the mother the resulting trust continued to operate in his favour and the beneficial ownership of the flat continued to vest in him despite the transfer of legal ownership to the mother Hence if the flat were not an HDB property the beneficial ownership in the flat would remain with the respondent by operation of a resulting trust Section 51 of the Act 14 The point in issue is whether this position in equity is altered in any way by the provisions of the Housing and Development Act Cap 129 1997 Ed the Act The relevant provisions are sub ss 4 and 5 of s 51 of the Act which read as follows 4 No trust in respect of any such flat house or other building that has been sold by the HDB under the provisions of Part IV of the Act shall be created by the owner thereof without the prior written approval of the Board HDB 5 Every trust which purports to be created in respect of any such flat house or other building without the prior written approval of the Board shall be void 15 It is argued on behalf of the appellants that the resulting trust created in this case is prohibited by these provisions On the other hand it is contended on behalf of the respondent that these provisions have no application in this case as the resulting trust here was not created by the respondent and or the mother but arose by operation of law Subsections 4 and 5 of s 51 only prevent the creation of an express trust and do not prohibit a resulting trust from arising 16 In support counsel for the respondent relies on the decision of the High Court in Tan Poh Soon v Phua Sin Yin 1995 2 SLR R 583 That case concerned a dispute between a husband and wife who were Singapore citizens and were married in Singapore The husband had migrated to the Netherlands and subsequently commenced divorce proceedings there against the wife who then applied to the High Court under s 56 of the Women s Charter Cap 353 now renumbered as s 59 in the 1997 edition for a declaration that she was beneficially entitled to a share of the HDB flat which had been purchased in the sole name of the husband G P Selvam J who heard the application relied on the decision of the House of Lords in Lloyds Bank plc v Rosset 1991 1 AC 107 and held that on the facts there was a constructive trust operating in favour of the wife The material facts which he found at 16 19 as giving rise to the constructive trust were these First the property was an HDB flat and the marriage was an ingredient on which the husband relied in applying for and obtaining the flat Second the wife being married to the husband was precluded from acquiring another HDB flat Third the wife s occupation of the flat while the husband was in the Netherlands was an important factor because the HDB could compulsorily acquire the flat on the ground that the owner and his spouse were not in occupation of the flat under s 56 1 a of the Act Fourth the evidence of the wife was that the husband had told her that it was not necessary to include her name as the flat was for both of them till death On these facts the learned judge found that there was an understanding between the parties that both of them would have an interest in and a possessory right to the flat Relying on this understanding the wife had made substantial contributions to the maintenance of the flat by the payment of conservancy and other charges in respect of the flat In these circumstances the learned judge held that the wife was entitled to a half share in the HDB flat on the basis of a constructive trust Section 51 of the Act was raised and the learned judge dealt with it as follows at 15 It was argued for the defendant that the provisions of the Housing and Development Board Act Cap 129 defeated the plaintiff s claim Section 51 of the Act provides that no trust can be created by the owner of any flat without the prior approval of the Housing and Development Board and if any trust is permitted to be so created it shall be void In my judgment that provision does not nullify the power of the court under s 56 or s 106 of the Women s Charter to declare an interest in an HDB flat whether in the nature of a trust or otherwise for such trust is not created by the owner It is decreed by the court under a statutory power It is a constructive trust under the second category mentioned by Lord Bridge in Lloyds Bank plc v Rosset 17 Relying on this decision counsel for the respondent submits that s 51 of the Act similarly does not prevent a resulting trust in an HDB flat from arising for such a trust is not created by anyone but is decreed by the court In our view Tan Poh Soon v Phua Sin Yin does not assist the respondent s case That decision does not deal with the question of whether a resulting trust falls within the prohibition of s 51 4 What was decided there was that the prohibition in s 51 4 of the Act does not prevent a constructive trust from arising The nature of a constructive trust is such that it could not be said to be created by the parties It is a trust which is imposed by equity in respect of an interest in a property in a variety of circumstances which would render it inequitable for the owner of the property or any interest therein to hold it for his benefit It arises independently of the intention of the parties A resulting trust however is different It arises from a certain transaction carried out intentionally by the parties concerned and the court infers an intention to create a trust in favour of a party The nature of this trust is summarised succinctly in Parker and Mellows The Modern Law of Trusts 7th Ed 1998 at p 36 Implied or resulting trusts arise where a settlor or testator carries out some intentional act other than the creation of a relationship of trustee and beneficiary from which the court infers a relationship of trustee and beneficiary They consequently arise from the unexpressed but presumed intention of the settlor or testator emphasis added 18 Thus the question of whether a resulting trust can be considered as being created for the purposes of sub ss 4 and 5 of s 51 of the Act remains The predecessor to sub ss 4 and 5 of s 51 was sub s 4 of the then s 44 which contained a blanket prohibition against the creation of any trusts over HDB properties The then s 44 4 was in these terms Every trust or alleged trust whether the trust is express implied or constructive which purports to be created in respect of any such flat house or other building by the owner thereof shall be null and void and shall be incapable of being enforced by any court By the Housing and Development Amendment Act 1984 which came into effect on 11 September 1994 this provision was deleted and was substituted by the two subsections which are now sub ss 4 and 5 of s 51 In moving the second reading for the Housing and Development Amendment Bill which inter alia introduced the existing sub ss 4 and 5 of s 51 the Minister for National Development said in Parliament As the Act now stands no trust in any form can be created in respect of an HDB dwelling or property The original intention of this provision was to prevent abuse by persons not eligible for HDB flats from purchasing a flat in the name of nominees Over the years however there has been increasing need for the HDB to permit the creation of trusts for legitimate reasons For example it is necessary to empower trustees to hold flats in trust for minor children who are citizens in the event of death of the lessee parent and where the surviving parent is neither a citizen nor a permanent resident and therefore not eligible to assume ownership of the flat Similarly in some cases of legal separation or divorce flats have to be held in trust for minor children until they reach the age of 21 years Clause 3 of this Amendment Bill therefore seeks to allow a trust to be created in respect of an HDB dwelling provided such trust is approved by the Board emphasis added 19 Despite the relaxation of the prohibition to permit creation of trusts with the prior written approval of HDB the underlying purpose of the prohibition remains unchanged In our view the respondent s contention that resulting trusts over HDB properties are not prohibited by s 51 4 of the Act would give rise to a highly unsatisfactory result and would open the way to abuse by persons who would and could easily purchase HDB properties through nominees For instance if a purchaser pays the purchase money for the property and the property is registered in the name of a nominee but he takes a declaration of trust executed by the nominee in his favour without HDB s prior written approval such a trust will be prohibited by s 51 4 and becomes void under s 51 5 of the Act On the other hand if no such declaration is executed the trust which arises by operation of law is not caught by s 51 4 Such a construction is untenable and would frustrate the policy of the Act and could not have been intended by Parliament 20 In any event the circumstances in which the respondent transferred his entire interest in the flat to his mother showed that by that transfer he intended that his mother would hold the flat in trust for him He said that he did not intend to make a gift of the flat to his mother On this point it is sufficient to set out verbatim his version of the events that transpired at the time He said in his affidavit the following 8 Some time in early 1986 HDB informed me that I have been allotted my new flat at Blk 144 Serangoon North Avenue 1 04 369 Singapore 550144 9 Under HDB s regulations I understand that I was not allowed to retain two flats in my name 10 As my mother

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  • Asian Corporate Services (SEA) Pte Ltd v Impact Pacific Consultants Pte Ltd and Others[2005] 4 SLR 61; [2005] SGHC 138
    defendant was holding himself out as its managing director 11 The execution of the search orders was uneventful The supervising solicitors confirmed that the defendants had co operated with them The seized documents and computer records were thereupon retained by the supervising solicitors as directed 12 The defendants subsequently appointed solicitors Except for the third defendant who was separately represented the other defendants collectively employed a single solicitor Counsel for the third defendant Mr Jimmy Yim SC emphasised that the fifth and sixth defendants neither owned nor controlled the third defendant and were in point of fact merely its employees The third defendant he added was not in competition with the plaintiff and purely serviced related entities 13 The third defendant s application to set aside the search order was eventually heard on 17 February 2005 At the conclusion of the hearing I agreed with Mr Yim s persuasive arguments and set aside the order against the third defendant I also directed that an inquiry be made as to any damage sustained by the third defendant such inquiry to be held after the trial The plaintiff now appeals against my decision setting aside the search order apropos the third defendant In so far as the remaining defendants are concerned the parties have reached an agreement to allow the original orders to stand while preserving their respective positions pending the trial The third defendant s case 14 The third defendant claims to belong to a stable of companies the Group with substantial online and investment business interests These interests purportedly cover diverse jurisdictions stretching from Fiji to Africa The administrative support centres for the Group are in London and Singapore The Group claims to have spent some 24 million Swiss francs on information technology infrastructure and services alone in 2003 and 2004 In addition it also incurred expenses during the same period to the tune of about S 5m on advisory legal and accounting services for a proposed initial public offering As part of its due diligence the third defendant obtained legal opinions from a number of well known international law firms to test waters on the viability of its proposals In short the Group unequivocally claims that given its very substantial and legitimate business interests of its own it is not a competitor of the plaintiff and has no commercial interest in the business or clients of the plaintiff 15 The third defendant steadfastly maintains that it is essentially a non profit generating cost centre for the Group providing corporate secretarial and accounting services legal services public relations and strategic business consultancy services exclusively to the Group It is one of the Group s four operating divisions and though funded by the Group operates on a shared costs model with other entities within the Group The third defendant employs a financial controller and accountants who supervise and collate the accounts and budgets of the various entities in the Group In addition the third defendant unequivocally asserts that it does not offer corporate secretarial and accounting services to entities outside the Group and that the plaintiff would never have been awarded the Group s business to that extent the fifth defendant s appointment to the third defendant s branch in Singapore is immaterial In support of its contentions the third defendant cites a Group policy dictating that this variety of services is to be performed in house whenever possible The fifth defendant it claims is employed merely to assist in corporate and administrative functions while the Group also employs three legal counsel to attend to its legal affairs It emphasises that the documents seized during the search order conclusively demonstrate that the third defendant does not offer corporate secretarial or accounting services to third parties The third defendant repeatedly stresses that the plaintiff s concerns and assertions about it being a competitor are wholly misplaced It claims that the plaintiff is tilting at windmills 16 The third defendant explains that the fifth defendant has been employed by the third defendant primarily because of his existing personal relationship with the Group s chairman Mr Gregg Kennedy Mr Kennedy Mr Kennedy spends a substantial amount of time in London and Singapore where he has permanent offices The fifth defendant has also been entrusted with the primary task of managing the Group s substantial offshore funds His role it is claimed is entrepreneurial and not administrative The Group it reiterates is not engaged in any manner of strategic competition with the plaintiff it has no interest in entering the general corporate secretarial and services market and the fifth defendant was not engaged to divert the plaintiff s business to the third defendant 17 I am persuaded and satisfied prima facie that the fifth defendant is by no means the operating mind of the third defendant He is an employee a functionary attending to administrative tasks and policy directives from the Group s management The monetary returns from the third defendant s contributions to the Group arising from its administrative services for the relevant period appear to be valued at a mere 19 000 18 When I queried plaintiff s counsel Mr Andy Leck whether he was in a position to refute the third defendant s assertions his response was at best non committal He stated We do not know He candidly conceded however that the fifth defendant is an employee of the third defendant I pause here to highlight that when the plaintiff initially obtained the Anton Piller orders against inter alia the third defendant the plaintiff s present general manager affirmed facts to the contrary In an affidavit he claimed that the 1st 2nd 3rd and 4th defendants appear to be under the control of the 5th defendant Mr Leck also acknowledged that there was no evidence of the third defendant providing services to companies or entities outside the Group Mr Leck nevertheless contends that the fifth defendant was duty bound to make disclosure to the plaintiff of his activities vis à vis the third defendant at the material time He omitted to do this He also reiterated that the third defendant shared the same premises as the first second and fourth defendants This Mr Leck argues pointed incontrovertibly to the third defendant s inextricable involvement and complicity in the fifth defendant s conspiracy to divert business to the third defendant from the plaintiff I was not impressed by these contentions as they appear to be grounded more in legal Micawberisms than in reality Legal criteria for a search order 19 It is stated in the report of a committee appointed by the Judges Council to report on the practical operation of Anton Piller orders and chaired by Staughton LJ Lord Chancellor s Department 1992 at para 2 3 that The overriding principle upon which the grant of these orders ought to be based is that of necessity No such order ought to be made unless it is necessary in the interests of justice No order ought to be made in wider terms than is necessary to achieve the legitimate object of the order emphasis added Steven Gee 1 supra points out at para 17 017 pp 491 492 of his book In Anton Piller KG v Manufacturing Processes Ltd Ormrod L J specified three essential pre conditions for the making of the order namely 1 there must be an extremely strong prima facie case 2 the damage potential or actual must be very serious for the applicant 3 there must be clear evidence that the defendants have in their possession incriminating documents or things which was the subject matter sought to be preserved in that case and that there is a real possibility that the defendants may destroy such material before any application inter partes can be made The Staughton Committee report para 2 8 added a fourth precondition namely that The harm likely to be caused by the execution of the Anton Piller order to the respondent and his business affairs must not be excessive or out of proportion to the legitimate object of the order Is there a prima facie case 20 The primary planks of the plaintiff s arguments in seeking to maintain the relief against the third defendant are encapsulated in the following paragraphs pleaded in the Statement of Claim T he Plaintiff discovered that since the Plaintiff has lost customers to the 1st and or 2nd and or 3rd and or 4th Defendants as a result of the 1st to 7th Defendants breaches and or unlawful acts and means by which the Plaintiff was injured Since on or about 2002 todate the 1st to 7th Defendants or any two or more together wrongfully and with intent to injure the Plaintiff and or to cause loss to the Plaintiff by unlawful means conspired and combined together to injure the Plaintiff emphasis added These particular assertions are devoid of any pertinent particulars pertaining to the third defendant s specific complicity in the alleged conspiracy In any conspiracy allegation it is essential that the claimant asserts and proves that the tortfeasors involved agreed to injure the claimant and that acts done in execution of the agreement have resulted in damage to the claimant Halsbury s Laws of England vol 45 2 Butterworths 4th Ed Reissue 1999 at para 697 Particulars ought to accompany and substantiate any such claim It is quite apparent that the plaintiff has considerable difficulty in pinpointing what its precise claim against the third defendant is 21 Upon closer analysis it is apparent that the sum total of the plaintiff s evidence against the third defendant appears at best threadbare At the ex parte stage the allegations against the third defendant were that The investigations and review revealed amongst others that since January 2003 several of the Plaintiff s customers had moved over to the 1st and or 2nd and or 3rd and or 4th Defendants The 5th Defendant also chose to direct potential new business away from the Plaintiff to the 1st 2nd 3rd and 4th Defendant s emphasis added 22 In opposing the third defendant s application to set aside the order the plaintiff attempted diffidently to elevate these allegations and tentatively asserted in an affidavit that T he 3rd Defendant chose to engage the 5th Defendant to conduct its business whilst they were well aware that he was in the Plaintiff s employ Furthermore the 5th Defendant utilised the time and resources of the Plaintiff in servicing the 3rd Defendant Surely it cannot lie in the mouth of the 3rd Defendant to contend that their activities are confidential to the Plaintiff in these circumstances T he 3rd Defendant s activities are corporate secretarial and accounting functions These services are provided by the Plaintiff Hence it is clear that the 5th Defendant by accepting a Directorship position in the 3rd Defendant was placing himself in a position of conflict with the Plaintiff He claims that the Group would never have engaged the services of the Plaintiff What efforts did the 5th Defendant undertake to bring the business to the Plaintiff Why did the 5th Defendant not disclose this opportunity to provide corporate secretarial services to the Group to the Plaintiff s board The Defendants conspired to keep this business within the so called Group at the expense of the Plaintiff emphasis added 23 I do not find these contentions particularly helpful While the plaintiff is certainly entitled to query the fifth defendant this does not in itself afford a legitimate foundation for a charge of conspiracy to divert related work away from the plaintiff Admittedly such queries posed by the plaintiff may well culminate in demonstrating that the fifth defendant was not completely candid with the plaintiff and might arguably also be in breach of his general fiduciary obligations to the plaintiff It is however quite another matter to allege that the third defendant itself was at the heart of a conspiracy and or played a role in diverting the plaintiff s business There is simply no cogent evidence that the plaintiff serviced the Group prior to the fifth defendant joining it Nor has the plaintiff been able to adequately counter the third defendant s stance that it is merely serving related entities and would have done so regardless of the fifth defendant s role in its Singapore branch That said I want to establish that I am not expressing any concluded views on this issue This much however is plain The plaintiff s hypotheses suppositions assumptions and concerns cannot cumulatively add up to a prima facie case of conspiracy involving the third defendant I am not satisfied at this juncture that the third defendant s provision of services to the Group can even begin to ground a legitimate claim against it as distinct from any claims that may be levelled against the fifth and sixth defendants in their personal capacity Absence of serious damage 24 It is incumbent upon a party seeking either to procure or maintain a search order to demonstrate that very serious damage would be sustained in the absence of such a remedy Anton Piller KG v Manufacturing Processes Ltd 1 supra at 62 In this case the apparent loss to the plaintiff is the business of the Group represented by the fees collected by the third defendant The plaintiff does not dispute that this adds up to a grand total of 19 000 for the relevant period This cannot in the present context be characterised by any measure as serious and or irremediable damage to the plaintiff At the very most this might if anything represent a modest proportion of the plaintiff s annual turnover Furthermore such an alleged loss is something that can be both objectively measured and ultimately financially assessed if the plaintiff s claim against the third defendant is upheld At or before the trial the third defendant will have to make proper disclosure of the relevant facts It appears to me that even using the most generous yardstick any alleged loss of business to the plaintiff as a result of the third defendant s role in the alleged conspiracy can only be regarded in the final analysis as quite inconsequential Real risk of destruction of evidence 25 The plaintiff has to persuade the court that there is solid evidence of a real risk that the third defendant would destroy or remove documents if not for the search order Petromar Energy Resources Pte Ltd v Glencore International AG 1999 2 SLR 609 26 Generally speaking the fact that a party has acted inappropriately in one context does not per se inexorably lead to the conclusion that it will destroy evidence as a matter of course For example in Expanded Metal Manufacturing Pte Ltd v Expanded Metal Co Ltd 1995 1 SLR 673 at 683 24 and 27 it was observed that the mere fact that the defendant was selling infringing items did not ineluctably lead to the conclusion that it would then go on to destroy evidence should litigation against it be initiated Significance was also accorded to the fact that the defendants were carrying on their business openly 27 In this case it would also appear that the fifth and sixth defendants involvement with the third defendant is not strictly speaking a clandestine affair They have broadly speaking made no attempt to conceal their relationship It is a matter of public record that they have been directors of the third defendant since 26 June 2003 Most of the documents generated by the third defendant in relation to its statutory corporate and secretarial functions must as a matter of obligation be properly maintained Simply because the fifth defendant may have deleted his personal computer records and may not have been completely candid with the plaintiff does not mean that I am prepared to conclude or even to assume that the third defendant will similarly either tamper with or destroy relevant evidence In the absence of contrary evidence from the plaintiff I accept the third defendant s assertion that it is in effect controlled by its London office and Mr Kennedy and not by the fifth defendant Disproportionate effect of search order 28 The effect of a search order must not be excessive and or disproportionate to the legitimate goal of the order In Lock International Plc v Beswick 1989 1 WLR 1268 at 1281 Hoffmann J as he then was observed with his customary acuity T here must be proportionality between the perceived threat to the plaintiff s rights and the remedy granted The fact that there is overwhelming evidence that the defendant has behaved wrongfully in his commercial relationships does not necessarily justify an Anton Piller order People whose commercial morality allows them to take a list of the customers with whom they were in contact while employed will not necessarily disobey an order of the court requiring them to deliver it up Not everyone who is misusing confidential information will destroy documents in the face of a court order requiring him to preserve them emphasis added Hoffmann J s observation was approved by L P Thean J as he then was in Computerland Corp v Yew Seng Computers Pte Ltd 1991 SLR 247 at 257 258 22 23 29 On the present facts it appears that the plaintiff cannot now dispute the amount of Group business currently undertaken by the third defendant Further information can be sieved or gleaned through the various procedural mechanisms integral to the framework of the interlocutory regime There is no pressing or compelling reason to maintain the search order purely to preserve evidence of these facts Neither the Group nor the third defendant has given the plaintiff any legitimate basis to conclude that relevant records will not be properly maintained To reiterate a point made earlier the fact that the fifth defendant may have consciously erased records of his relevant dealings and communications from the plaintiff s computer does not per se afford compelling evidence that the management of the

    Original URL path: http://www.singaporelaw.sg/sglaw/laws-of-singapore/case-law/cases-in-articles/equity-and-trusts/1534-asian-corporate-services-sea-pte-ltd-v-impact-pacific-consultants-pte-ltd-and-others-2005-4-slr-61-2005-sghc-138 (2016-01-30)
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