Cheong Soh Chin v Eng Chiet Shoong: Fiduciary Duties, Private Equity Investments & Accounting

In Cheong Soh Chin and others v Eng Chiet Shoong and others, the Singapore High Court addressed a claim by the plaintiffs, Cheong Soh Chin, Wee Boo Kuan, and Wee Boo Tee, against the defendants, Eng Chiet Shoong, Lee Siew Yuen Sylvia, and C S Partners Pte Ltd, for breach of fiduciary duties related to the management of the plaintiffs' US$111 million private equity investments. The plaintiffs sought a transfer of investments, an accounting order, a tracing order, and a payment order. The defendants counterclaimed for US$18 million in management fees and expenses. The court granted the transfer order, accounting order, and payment order in favor of the plaintiffs, dismissed the tracing order as premature, and dismissed the majority of the defendants’ counterclaim, save for ordering the plaintiffs to pay agreed management fees of US$450,000 per annum from 2009-2010 until the transfer of the PE funds.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Judgment for the plaintiffs; transfer order, accounting order, and payment order granted. Counterclaim dismissed except for agreed management fees.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

High Court case concerning breach of fiduciary duties in managing plaintiffs' US$111m private equity investments. Judgment for plaintiffs; transfer and accounting orders granted.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Cheong Soh ChinPlaintiffIndividualJudgment for PlaintiffWon
Wee Boo KuanPlaintiffIndividualJudgment for PlaintiffWon
Wee Boo TeePlaintiffIndividualJudgment for PlaintiffWon
Eng Chiet ShoongDefendantIndividualCounterclaim DismissedLost
Lee Siew Yuen SylviaDefendantIndividualCounterclaim DismissedLost
C S Partners Pte LtdDefendantCorporationCounterclaim DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Vinodh CoomaraswamyJudgeYes

4. Counsels

Counsel NameOrganization
Foo Maw ShenRodyk & Davidson LLP
Chu Hua YiRodyk & Davidson LLP
Jansen AwRodyk & Davidson LLP
Philip JeyaretnamRodyk & Davidson LLP
Daryl OngRodyk & Davidson LLP
Charmaine KongRodyk & Davidson LLP
Jill Ann KohWongPartnership LLP
Koh Swee YenWongPartnership LLP
Ho Wei JieWongPartnership LLP
Keith HanWongPartnership LLP
Alvin YeoWongPartnership LLP
Jared ChenWongPartnership LLP

4. Facts

  1. Plaintiffs entrusted US$111m to the first and second defendants for investment.
  2. Investments were made in 15 private equity funds and five direct investments.
  3. Investments were held through a web of special purpose vehicles controlled by the defendants.
  4. Plaintiffs sought transfer of ownership and control of all investments and SPVs.
  5. Defendants accepted that the investments belonged to the plaintiffs but opposed the relief sought.
  6. Defendants counterclaimed for US$18m in management fees and related expenses.
  7. The parties had a long-standing relationship of trust and confidence.

5. Formal Citations

  1. Cheong Soh Chin and others v Eng Chiet Shoong and others, Suit No 322 of 2012, [2015] SGHC 173
  2. Cheong Soh Chin and others v Eng Chiet Shoong and others, Civil Appeals Nos 97 and 99 of 2014, [2016] SGCA 45

6. Timeline

DateEvent
First plaintiff's husband passed away.
First defendant became senior vice-president of GIC Special Investments Pte Ltd.
First defendant's relationship with the plaintiffs began.
Plaintiffs entrusted US$111m to the first and second defendants.
Third defendant incorporated by the second defendant.
First defendant rendered services to the third defendant pursuant to a consultancy agreement.
Plaintiffs paid GBP 257,731.96 to the defendants.
Plaintiffs made a payment of US$450,000 to the defendants.
First defendant sent an email to the second and third plaintiffs regarding the WWW concept.
Second defendant suggested to the plaintiffs in an email that they take up additional PE fund commitments.
First defendant wrote an email informing the second plaintiff that a limited partnership agreement was being prepared.
Plaintiffs made a payment of US$450,000 to the defendants.
Global financial crisis.
Second defendant sent an email regarding WPFOF registration in Cayman.
Second defendant wrote an email referring to the Bridgepoint fund.
Plaintiffs decided to wind down and divest all of their holdings.
Plaintiffs demanded that the first and second defendants transfer all rights, title and interest in their investments.
Plaintiffs demanded a full accounting and reconciliation of their investment.
Plaintiffs commenced this action.
Defendants rendered a file to the plaintiffs.
Third defendant became a defendant on its own application.
Judgment given for the plaintiffs.
Decision Date

7. Legal Issues

  1. Breach of Fiduciary Duty
    • Outcome: The court found that the first and second defendants owed fiduciary duties to the plaintiffs and were in wilful default of those duties.
    • Category: Substantive
    • Sub-Issues:
      • Wilful Default
      • Failure to Account
  2. Duty to Account
    • Outcome: The court held that the defendants had a personal liability to keep and render a proper and complete account to the plaintiffs and that the provided file was insufficient to comply with this duty.
    • Category: Substantive
    • Sub-Issues:
      • Standard of Accounting
      • Sufficiency of Account
  3. Entitlement to Management Fees
    • Outcome: The court found that the defendants were entitled to agreed management fees for the initial investment but not for the additional investments, as there was no implied agreement or basis for a claim on a quantum meruit.
    • Category: Substantive
    • Sub-Issues:
      • Implied Agreement
      • Quantum Meruit
  4. Tracing
    • Outcome: The court declined to make a tracing order at this point in the litigation, considering it premature.
    • Category: Procedural

8. Remedies Sought

  1. Transfer of Ownership and Control of Investments
  2. Accounting Order
  3. Tracing Order
  4. Payment Order

9. Cause of Actions

  • Breach of Fiduciary Duty
  • Failure to Account

10. Practice Areas

  • Commercial Litigation
  • Trust Litigation
  • Breach of Fiduciary Duty
  • Private Equity Investments

11. Industries

  • Finance
  • Investment Management

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Armitage v Nurse and othersChancery DivisionYes[1998] Ch 241England and WalesCited for the principle that a trustee's duty to account is fundamental to a trust.
Foreman v KingstonHigh Court of New ZealandYes[2004] 1 NZLR 841New ZealandCited for the principle that a trustee's duty to account is fundamental to a trust.
Spellson v GeorgeSupreme Court of New South WalesYes(1987) 11 NSWLR 300AustraliaCited for the principle that a trustee's duty to account is fundamental to a trust.
Re TebbsN/AYes[1976] 1 All ER 858N/ACited for the principle of wilful default and the need to prove at least one example of wilful default on the part of the fiduciary or trustee to secure an account on the basis of wilful default.
Russell v RussellN/AYes(1891) 17 VLR 729N/ACited for the principle of wilful default and the need to prove at least one example of wilful default on the part of the fiduciary or trustee to secure an account on the basis of wilful default.
Glazier v Australian Men’s Health (No 2)Supreme Court of New South WalesYes[2001] NSWSC 6AustraliaCited for the principle of wilful default and the need to prove at least one example of wilful default on the part of the fiduciary or trustee to secure an account on the basis of wilful default.
Ng Foong Yin v Koh Thong SamN/AYes[2013] 3 SLR 455SingaporeCited for the principle of wilful default and the need to prove at least one example of wilful default on the part of the fiduciary or trustee to secure an account on the basis of wilful default.
Sleight v LawsonN/AYes(1857) 3 K & J 292N/ACited for the principle of wilful default and the need to prove at least one example of wilful default on the part of the fiduciary or trustee to secure an account on the basis of wilful default.
Cooper v CarterN/AYes(1852) 2 De G M & G 292N/ACited for the principle of wilful default and the need to prove at least one example of wilful default on the part of the fiduciary or trustee to secure an account on the basis of wilful default.
Re SymonsN/AYes(1882) 21 Ch D 757N/ACited for the principle of wilful default and the need to prove at least one example of wilful default on the part of the fiduciary or trustee to secure an account on the basis of wilful default.
Re StevensN/AYes[1897] 1 Ch 422N/ACited for the scope of inquiry under Order 43 of the Rules of Court.
Bartlett v Barclays Bank Trust Co Ltd (No 2)N/AYes[1980] Ch 515N/ACited for the scope of inquiry under Order 43 of the Rules of Court.
Coultard v Disco Mix ClubN/AYes[2001] 1 WLR 707N/ACited for the scope of inquiry under Order 43 of the Rules of Court.
Saunders v VautierN/AYes(1841) Ch 82N/ACited for the rule that beneficiaries with the entire beneficial interest can require the trustee to transfer the legal estate and terminate the trust.
Stephen Donald Architects Ltd v Christopher KingHigh Court of JusticeYes[2003] EWHC 1867England and WalesCited for the principle that the nature and extent of the risk voluntarily assumed by a claimant is a material consideration in determining whether an enrichment is unjust in a claim for quantum meruit.
Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue CommissionersHouse of LordsYes[2008] 1 AC 561England and WalesCited for the concept of subjective devaluation in restitution claims.

13. Applicable Rules

Rule Name
Order 43 of the Rules of Court

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • Private Equity
  • Special Purpose Vehicle
  • Fiduciary Duty
  • Accounting
  • Wilful Default
  • Quantum Meruit
  • Management Fees
  • WWW Concept
  • Fund of Funds
  • Limited Partnership Agreement

15.2 Keywords

  • fiduciary duty
  • private equity
  • accounting
  • trust
  • investments
  • SPV
  • management fees

17. Areas of Law

Area NameRelevance Score
Fiduciary Duties80
Trust Law70
Account of Profits60
Accounting and Inquiry60
Commercial Disputes60
Contract Law50
Unjust Enrichment40
Breach of Contract40
Damages30
Corporate Law30

16. Subjects

  • Trusts
  • Agency
  • Investments
  • Fiduciary Duties
  • Accounting
  • Private Equity