Case Summaries

Toh Wee Ping Benjamin and another v Grande Corp Pte Ltd [2020] SGCA 48

14 May 2020

Case summary

Toh Wee Ping Benjamin and another v Grande Corp Pte Ltd [2020] SGCA 48

Civil Appeal No 138 of 2019

Decision of the Court of Appeal (delivered by Judith Prakash JA):

Outcome: The Court of Appeal allowed the appeal in part. The order made in the judgment below that the appellants pay the respondent the Sums Received was set aside but the order to repay the Loans was affirmed.

The resolution of the appeal involved a consideration of the effect of striking out a party’s defence and the application of the rule concerning averments in a statement of claim that are not denied. The question that the appellants raised was whether the striking out of their defence entailed admission of the entirety of the respondent’s statement of claim, including the damages claimed so as to prevent them from challenging the amounts pleaded.

Background to the appeal

The parties and their relationship

1. The two appellants, Mr Toh Wee Ping Benjamin (“Mr Toh”) and Ms Goh Bee Heong (“Ms Goh”), were two of the defendants in a High Court Suit No 331 of 2013 (“Suit 331”) brought by the respondent-plaintiff. Mr Toh is the sole director and shareholder of Cubix International Pte Ltd, a company in the business of art and graphic design services. Mr Toh is also the sole director and majority shareholder of Cubix Group Pte Ltd (“Cubix Group”), an investment holding company.

2. The respondent is Grande Corporation Pte Ltd (“Grande”), a Singapore-incorporated investment holding company.

3. Grande and Cubix Group were partners in a joint venture company known as Cubix and Kosmic Pte Ltd (“C&K”). C&K was incorporated to carry on the business of development, production and exploitation of film and other media. Its shareholders were Grande and Cubix Group, holding one share each. On incorporation, Mr Toh was appointed its sole director.

4. The terms of the joint venture were recorded in a joint venture agreement (“the JV Agreement”) between Grande and Cubix Group. Pursuant to the JV Agreement, Grande transferred to C&K on various dates sums totalling S$291,288 and US$458,000 as contributions to and/or loans for, the operating expenses of C&K.

Commencement of the action and procedural history

5. The respondent commenced Suit 331 claiming that the funding, business, clientele, projects and staff of C&K were wrongfully transferred to three companies incorporated by Mr Toh and Ms Goh in or about 2008 and that, by reason of this wrongdoing, it was entitled to the return of all moneys it had transferred to C&K. The recipient companies can be referred to as “the AXXIS Companies”.

6. In the statement of claim filed and subsequently amended in Suit 331 (the “SOC”), the respondent claimed two sums of money: (a) the “Loans” comprising S$291,288 and US$458,000 transferred by Grande to C&K as noted above; and (b) the “Sums Received” comprising US$270,000 and/or US$600,000–US$700,000, being the benefits purportedly received by the AXXIS Companies, which were traceable to the appellants’ misdeeds vis-à-vis C&K. Several causes of action were pleaded by Grande against the appellants in Suit 331. These included breaches of fiduciary duties and breaches of the JV Agreement.

7. Subsequently the appellants committed a string of breaches of discovery obligations and court orders made in Suit 331. Hence, the respondent applied to strike out the defence of the appellants and the AXXIS Companies and for judgment to be entered in its favour.The Judge granted the application in respect of the appellants and struck out the joint defence as against both of them under O 24 r 16(1) of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (the “ROC”). As a consequence, interlocutory judgment against them for damages to be assessed was entered for the respondent. The judge’s reasons are found in Grande Corp Pte Ltd v Cubix International Pte Ltd and others [2018] SGHC 13 (the “Striking Out Judgment”).

8. The appellants did not appeal against the Striking Out Judgment. They did, however, contest Grande’s claims at the assessment of damages proceedings. Notably, the judge found that since the appellants’ defence was struck out in its entirety, they “must be taken to have admitted to all matters pleaded in the plaintiff’s statement of claim”: Grande Corp Pte Ltd v Cubix Group Pte Ltd and others [2019] SGHC 146 (the “Assessment Judgment”) at [12]. Thus, the judge held that the appellants were liable to the respondent for both the Loans and the Sums Received. The appellants appealed against these awards.

The Court of Appeal’s decision

9. The Court of Appeal allowed the appeal in part. The order made by the judge that the appellants pay the respondent the Sums Received was set aside but the order to repay the Loans was affirmed.

10. Where a defence is struck out under O 24 r 16(1) of the ROC, the rules in O 19 of the ROC dealing with default of defence from r 2 to r 8 are applicable, depending on the specific claims pleaded in the statement of claim in question. In the present case, the SOC contained liquidated claims, unliquidated claims for damages and claims for declarations, some of which were claims in the alternative. In line with O 19 r 6 of the ROC which concerns default of defence in a case of mixed claims, interlocutory judgment for damages to be assessed, as ordered by the judge, was appropriate (at [35] and [36]).

11. In accordance with the rules of pleadings prescribed in O 18 of the ROC, and in particular, O 18 r 13, where a defence is struck out, only allegations of fact made in the statement of claim are deemed admitted. Averments of law or points of law in a given statement of claim cannot be deemed admitted, much less erroneous assertions of them. Determinations of law are to be decided by the court. As to averments that engage both issues of fact and law, the court must be satisfied on an examination of the statement of claim alone that the facts therein are sufficient to sustain the pleaded cause of action or claim. For instance, in relation to a claim for damages, there would need to be facts that show damage has been suffered (at [38], [39], [40], [42] and [43]).

Therefore, in the present case, after their defence was struck out, the appellants were still able to contest whether damage had been suffered by Grande (at least to the extent that the pleaded facts were unclear about this) and what the quantum of damages should be. They were, effectively, in the same position as if they had an existing defence but had failed to specifically traverse the points about damages raised in the SOC (at [47]).

The Loans

13. In respect of the Loans, the key facts pleaded in the SOC are that:

  1. Grande transferred sums of money to C&K as contributions to its operations or as loans for its operating expenses in anticipation of the joint venture;
  2. the sums transferred were repayable on demand;
  3. the sums were transferred between 25 April 2007 and 28 January 2008; and
  4. the total amounts loaned were S$291,288 and US$458,000.

Since the appellants’ defence was struck out, they were deemed to have admitted these facts. In the assessment hearing, the appellants could not and, to be fair, did not challenge these admissions (at [49] and [51]).

14. Of the various causes of action which Grande pleaded in the SOC in respect of the appellants’ liability for the Loans, the most straightforward claim was that in fraudulent misrepresentation. On the facts pleaded and deemed admitted in the SOC alone, the Court of Appeal found that the requisite elements for misrepresentation had been made out. Therefore, the Court of Appeal agreed with the trial judge that the appellants were jointly and severally liable to reimburse Grande for the loss it incurred by reason of the misrepresentations andthat this loss was the sum of the Loans. Therefore, it affirmed the judgment below in this respect (at [54], [57] and [58]).

15. However, the Court of Appeal did not consider that the claims for breach of contract or breach of fiduciary duties were made out against Mr Toh and Ms Goh personally on the pleadings alone. In the main, this was because many of the averments in the SOC in support of these two causes of action were either averments of law or averments of both law and fact, which could not be deemed admitted as a matter of course. In relation to the claim for breach of contract, for example, there was insufficient factual basis for granting the exceptional remedy of piercing the corporate veil of Cubix Group to implicate the appellants personally, as was pleaded by Grande. In relation to the claim for breach of fiduciary duties, the question of whether the appellants were fiduciaries vis-à-vis Grande is a mixed question of fact and law, and the mere assertion of it in the SOC could not make them fiduciaries. In any event, the facts in the SOC suggesting the existence of a fiduciary relationship had to be examined in the context of Singapore law to determine whether they were sufficient to make the appellants ad hoc fiduciaries and the judge below did not make any finding to this effect (at [60], [61], [65] and [66]).

Sums Received

16. The respondent’s claim for the Sums Received (comprising US$270,000 and/or US$600,000–US$700,000) was essentially that the appellants were liable to account to Grande for all the profits and benefits traceable to their breach of fiduciary duties. This was a conclusion of legal consequence, specifically the remedial consequences of a purported breach of fiduciary duties (which the Court of Appeal had rejected as a viable cause of action on the pleadings as noted above), rather than an averment of facts (at [68]).

17. The Court of Appeal found that that there was no factual basis for Grande’s claim for the Sums Received and Grande was therefore not entitled to the same for two main reasons. First, while the SOC stated that the US$270,000 and/or US$600,000–US$700,000 was received by the AXXIS Companies, it was notably silent on the source of the Sums Received and lacking in detail. This flaw was conceded by counsel for Grande both before the judge below and the Court of Appeal. Second, the judge below was misled into awarding both the Loans and the Sums Received because the Sums Received were not separate and distinct from the Loans but were rather overlapping claims in the alternative. While this was unclear from the language of the SOC, counsel for Grande clarified that this was indeed the case. In effect, Grande was seeking to trace the value of the Loans into the Sums Received, the latter being the substitute of the original assets. Grande could not be entitled to recover both the Loans and the Sums Received because that would constitute a double recovery for the same loss, and thus the award for the Sums Received was set aside (at [70] and [72]).