Yangbum Engineering Pte Ltd v Liang Xihong

Ms Liang Xihong (Sandy) and her former husband, Mr Loong Soo Min (Sam), are equal shareholders in Yangbum Engineering Pte Ltd (Yangbum), of which Sam is sole director. In 2008 the Ministry of Manpower banned Yangbum and companies in which Sam was a director or shareholder from hiring foreign workers for two years. Ace Class Precision Engineering Pte Ltd and Apex Precision Engineering Pte Ltd were then incorporated with Sandy as sole shareholder and Yangbum employees as directors. Qing Lian Precision Pte Ltd was incorporated with Sandy's cousin as shareholder to help her obtain a work permit, and her shares later passed to Sandy. All three companies worked exclusively as Yangbum's subcontractors, run from Yangbum's premises on Sam's decisions.

After the marriage broke down, Sandy appointed herself and another man as directors in March 2020 and had the three companies wound up. In earlier proceedings, Liang Xihong v Loong Soo Min and another and another suit [2023] SGHC 80, the same judge found that Sandy did not own the shares beneficially and that they were not held on trust for Sam either. Sandy did not appeal those findings.

In Originating Claim No 698 of 2023, Yangbum claimed that Sandy holds the shares on resulting trust or, alternatively, common intention constructive trust for it. Sandy's case was that Yangbum had not proved either trust so beneficial ownership followed her legal title. She said she paid the incorporation costs later by a $50,000 cheque, and argued that any trust was unenforceable because the companies were set up to get around the ministry's ban.

1. Whether Sandy held the shares on common intention constructive trusts for Yangbum.
2. Whether Sandy held the shares on resulting trusts for Yangbum, and what effect the $50,000 cheque had.
3. Whether any trust was unenforceable for illegality because the companies were created to circumvent the ministry's ban.

On the constructive trust, a common intention may be inferred but not imputed. Sam testified that he could not recall and had never thought about beneficial ownership when the companies were set up, so no common intention existed to be inferred.

On the resulting trust, following Chan Yuen Lan v See Fong Mun [2014] 3 SLR 1048 and the rule that rights in shares arise on incorporation, the question was who paid the share capital and incorporation fees when each company was formed. Yangbum's wider support in know-how, staff and machinery did not count because it did not bring the shares into existence. Records from 2008 were gone, but the court inferred that Yangbum paid: the companies were formed for its purposes, its finance department handled incorporation, Sandy accepted she did not pay at the time, and her own counsel described the cheque as a "refund". Sandy was therefore presumed to hold the shares on resulting trust, and the cousin could pass only legal title. The cheque made no difference. Sandy did not prove what it paid for, it was made out to Qing Lian although that company did not exist when the other two were formed, and a later payment could not displace a trust that crystallised at acquisition unless Yangbum had paid on her behalf, which was never put. Yangbum's failure to plead the payment expressly caused no prejudice. Its alternative argument that it lacked any intention to benefit Sandy failed on Sam's evidence.

On illegality, Sandy accepted that the proportionality approach in Lau Sheng Jan Alistair v Lau Cheok Joo Richard and another [2023] 5 SLR 1703 applied and bore the burden of proof. There was no evidence of what the ban actually said or its legal basis, so the court could not assess whether the trusts served an illegal purpose. The ban had lapsed, and refusing enforcement would leave Sandy enjoying shares she was found not to own. The work permit fraud case she relied on was different on its facts. Indemnity costs reflected her unreasonable conduct in relitigating earlier findings.

The court allowed Yangbum's claim on resulting trusts, while its alternative claim on common intention constructive trusts failed. It declared that Sandy holds the legal title in the shares on trust for Yangbum and ordered her to transfer that title to Yangbum within five weeks, the liquidators having indicated they would sanction the transfer on a court order. Sandy was ordered to pay costs on an indemnity basis fixed at $233,000 plus disbursements of $54,733.60. Sandy has appealed.