KOK KUAN HWA v YAP WING SANG & 7 Ors

Facts

Kok Kuan Hwa (the plaintiff) and Yap Wing Sang (the defendant) built the Chang Cheng Group, a food and beverage business of coffeeshops and food courts, from an economy rice stall in Woodlands starting in 1998 or 1999. The group had no holding company; it was a set of companies in which they held shares directly. It was common ground that from 2011 the plaintiff had a 50% interest in the group's capital and income, and the defendant and the plaintiff's wife, Mdm Lim, 25% each. Ten property-holding companies (the Annex 2 Companies) owned the real estate the group operated from.

The relationship broke down by 2017 or 2018. In December 2018 the defendant transferred his shares in ten operating companies (the Annex 1 Companies) to the plaintiff and resigned his offices. Each side said this followed an oral contract made through an intermediary, but they described different contracts. In December 2020 the parties sold their interests in four Annex 2 Companies. The plaintiff alleged a further oral contract of 5 December 2020 under which he would buy the defendant's shares in the remaining six Annex 2 Companies and Chang Cheng Group Pte Ltd at a price averaging two valuations. In Suit No 905 of 2021 he sued on these contracts; the defendant counterclaimed for damages, declarations of ownership and a 25% interest in all the food and beverage businesses.

Issues

1. Whether the parties' interests before 2011 were governed by a 2001 agreement giving the defendant 25% or by a 1999 agreement giving him 30%, and whether the Annex 2 Companies were part of the group.
2. Whether the parties made the plaintiff's alleged 2018 exchange agreement or the defendant's alleged share sale contract, and what followed for the transferred shares.
3. Whether the parties made a binding contract on 5 December 2020.
4. Whether the defendant owned his registered shares in the property companies absolutely, and whether he had a 25% interest in all the food and beverage businesses.

Holding

The High Court dismissed the plaintiff's claim and allowed the defendant's counterclaim in part. It declared that the 1999 agreement was made and none of the other alleged agreements, that the plaintiff holds the Annex 1 shares on resulting trust for the defendant and must transfer them back for no consideration and account for benefits received, and that the defendant owns his registered shares in each Annex 2 Company and Chang Cheng Group Pte Ltd absolutely. It refused the declaration of a 25% interest in all the businesses and ordered the plaintiff to pay costs fixed at $542,948.20.

Reasoning

Accepting the plaintiff's expert, whose view rested on payment records, the court found the property companies were funded by group companies, run by group staff and leased to the group, so they were part of the group in a commercial sense. But there was no evidence beyond the plaintiff's word of a 2001 agreement, while profit-sharing documents for 2009 and 2010, signed by both, reflected the 1999 split of 70% and 30%.

The plaintiff did not prove his 2018 agreement: a 2017 spreadsheet predated the talks and showed the defendant would lose by it, a recorded 2021 conversation with the intermediary was set up for litigation while both had been drinking, and his statements to his own solicitor were not direct evidence. The defendant's share sale contract was equally unproved and too uncertain, being at most an agreement to negotiate. As the plaintiff conceded, the transferred shares were therefore held on resulting trust.

On 5 December 2020 the parties agreed the essential terms, but there was no intention to be bound immediately. The plaintiff's own message spoke of discussing the purchase after valuations, and both sides kept making new offers well into 2021.

A contract made in 1999 could not by itself give proprietary rights in shares of companies formed later, absent some new act, and the plaintiff pleaded no claim in equity; a late request to amend after trial was refused as prejudicial. The defendant's intended gift of 5% to Mdm Lim in 2011 was never completed. So his registered shareholdings were his absolutely, but he gave no evidence that he held shares in all of the businesses he listed.

From the judgment