HO SOO TONG & 2 Ors v HO SOO FONG & 2 Ors

Facts

Three brothers, Ho Soo Tong, Ho Soo Whatt and Ho Liew Leng @ Edwin, sued two other brothers, Ho Soo Fong (HSF) and Ho Soo Kheng (HSK), in Suit No 498 of 2020 over the ownership of shares in Invest Ho Properties Pte Ltd, which was joined as nominal defendant. Invest Ho has 2,500,000 issued shares, and HSF and HSK were its registered shareholders. The plaintiffs claimed that the brothers had always treated their business assets as owned equally, that under a 1995 agreement the defendants held Invest Ho shares on trust for all five brothers, and that at a 2012 meeting the five, joined by the son of their late eldest brother, Hoo Peng Zuo, signed a document recording that the shares were to be divided equally amongst the six of them.

On 1 March 2017 HSF transferred 310,000 shares each to the three plaintiffs and Peng Zuo. In 2019 the plaintiffs discovered that their 930,000 shares had been transferred back to HSF. The defendants, who acted in person after their counsel discharged themselves on the first day of trial, denied any family business or trust. They said the 2012 arrangement was an aborted sale at $2.50 a share, that the 2017 transfers were a sale at $775,000 each, and that HSF took the shares back because the plaintiffs did not pay.

Issues

1. Whether the plaintiffs' pleadings sufficed for an alternative common intention constructive trust claim
2. Whether the defendants could raise new allegations and evidence in their closing submissions
3. Whether an express trust arose giving each plaintiff 416,666.67 shares in Invest Ho

Holding

Mavis Chionh Sze Chyi J allowed the plaintiffs' claim, declaring each plaintiff the beneficial owner of 416,666.67 shares under an express trust arising from the 2012 agreement. Because those fractional shares could not be transferred, the court ordered the defendants to procure a capital reduction cancelling four shares and then to transfer 416,666 shares to each plaintiff within four weeks at their own cost, with the Registrar empowered to sign documents if they did not. Pending completion they were not to encumber, dispose of or issue shares. Costs were awarded to the plaintiffs. No orders were made on Peng Zuo's shareholding, as he was not a party.

Reasoning

On pleadings, the court held that the material facts for a common intention constructive trust were pleaded even though the doctrine was not named, so the defendants had fair notice. It found that the defendants had pleaded the alleged sale, but refused to let them introduce new allegations about another property and an overdraft, and new exhibits, in closing submissions, as this would cause grave prejudice to the plaintiffs; it added that the material would not have changed the outcome.

On the express trust, the 1995 agreement could not found it because it excluded the eldest brother's branch and was superseded. Under the 2012 agreement, subject matter and objects were clear, so the question was certainty of intention. The court accepted the plaintiffs' account. The signed 2012 document said the shares were to be divided equally and said nothing about payment, which was incongruous with a sale for a large sum. Peng Zuo, whom the court found an honest witness, said nothing was mentioned about buying shares. For 2017, the transfer forms and directors' resolution described no sale, and the company secretary said she was never told of a sale or a $775,000 price and that she filled in the $4,030 figure from net asset value before signing. HSF's reply to the letter of demand said he had given the shares out of goodwill and taken them back because the plaintiffs were ungrateful, not for non-payment. The court rejected HSF's claim that the forms were blank when signed. The plaintiffs had also stood as guarantors, advanced substantial personal funds, and mortgaged their properties for Invest Ho, which they would not have done without a shared understanding of equal ownership; the court did not rely on one property contribution, which the documents suggested was held on trust for the defendants. The three certainties were met, so the court did not decide the constructive trust claim.

From the judgment