Tanaka Lumber v Datuk Tufail: Trust, Fiduciary Duty & Conspiracy in Timber Trading Dispute
In a suit before the High Court of Singapore, Tanaka Lumber Pte Ltd, represented by Mr. Ling Hoe Kieh, claimed that Datuk Haji Mohammad Tufail bin Mahmud and Dato Ting Check Sii breached their fiduciary duties and held funds in trust for Tanaka's investments in Malaysian companies. Datuk Tufail denied the claims and counterclaimed conspiracy. The court, presided over by Edmund Leow JC, dismissed Tanaka's claim, Datuk Tufail's counterclaim, and the third-party claim, citing unreliable evidence from both sides. The primary legal issue was whether a trust existed and whether fiduciary duties were breached.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Tanaka's claim, Datuk Tufail's counterclaim, and third-party claim dismissed.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Tanaka Lumber's claim against Datuk Tufail for breach of trust and fiduciary duties was dismissed due to unreliable evidence. The counterclaim was also dismissed.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Tanaka Lumber Pte Ltd | Plaintiff | Corporation | Claim Dismissed | Dismissed | Goh Phai Cheng |
| Datuk Haji Mohammad Tufail bin Mahmud | Defendant | Individual | Counterclaim Dismissed | Dismissed | Harry Elias, Andy Lem Jit Min, Sharmini Sharon Selvaratnam, Lee Hui Min, Lin Chunlong |
| Dato Ting Check Sii | Defendant, First Third Party | Individual | Claim Dismissed | Dismissed | Khor Wee Siong, Tay Yu Shan |
| Ling Hoe Kieh @ Ling Chun Kai | Second Third Party | Individual | Claim Dismissed | Dismissed | Ling Hoe Kieh @ Ling Chun Kai |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Edmund Leow | Judicial Commissioner | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Goh Phai Cheng | Goh Phai Cheng LLC |
| Harry Elias | Harry Elias Partnership LLP |
| Andy Lem Jit Min | Harry Elias Partnership LLP |
| Sharmini Sharon Selvaratnam | Harry Elias Partnership LLP |
| Lee Hui Min | Harry Elias Partnership LLP |
| Lin Chunlong | Harry Elias Partnership LLP |
| Khor Wee Siong | Khor Thiam Beng & Partners |
| Tay Yu Shan | Khor Thiam Beng & Partners |
| Ling Hoe Kieh @ Ling Chun Kai | Independent Practitioner |
4. Facts
- Tanaka Lumber Pte Ltd was incorporated in Singapore in February 1987, primarily trading timber.
- Datuk Tufail and Dato Ting are two of Tanaka's three shareholders and directors.
- Between 1992 and 1996, approximately US$8.26 million was transferred from Tanaka's account to an account held jointly by Datuk Tufail and Dato Ting.
- Tanaka claimed the transferred sum was held on trust for investments in Malaysian companies.
- Datuk Tufail denied the trust, claiming the sum belonged to him, Dato Ting, and/or SSB.
- Tanaka initially based its claim on directors' resolutions, later abandoned due to evidence of fabrication.
- The relationship between the parties soured around 2003.
5. Formal Citations
- Tanaka Lumber Pte Ltd v Datuk Haji Mohammad Tufail bin Mahmud and another, Suit No 783 of 2012, [2015] SGHC 276
6. Timeline
| Date | Event |
|---|---|
| Datuk Tufail and Dato Ting became acquainted at Ding Brothers Sdn Bhd. | |
| Sanyan Sdn Bhd incorporated. | |
| Datuk Tufail, Dato Ting, and Mr Ling decided to incorporate Tanaka in Singapore. | |
| Tanaka Lumber Pte Ltd incorporated in Singapore. | |
| Monies transferred from Tanaka's Current Account to the Joint Account began. | |
| Alleged oral shareholder agreement in 1993. | |
| Alleged oral shareholder agreement in 1994. | |
| Monies transferred from Tanaka's Current Account to the Joint Account ended. | |
| Investigations carried out by the Center for Investigation and Intelligence of the Inland Revenue Board in Kuching. | |
| SSB entered into a settlement agreement with the tax authority. | |
| Relationship between the parties soured. | |
| Datuk Tufail took over the role of managing director of Sanyan Holdings Sdn Bhd and Sanyan Wood Industries Sdn Bhd from Dato Ting. | |
| Legal proceedings commenced by Tanaka. | |
| Defence filed by the clients. | |
| Tanaka filed its statement of claim (first amendment). | |
| Dr Steven James Strach filed an AEIC. | |
| Pre-trial conference. | |
| Mr Pang filed an expert report. | |
| Tanaka applied to amend its statement of claim. | |
| Mr Pang was withdrawn as a witness. | |
| Decision Date. |
7. Legal Issues
- Breach of Trust
- Outcome: The court found that Tanaka had not discharged its legal burden of proving that the money was transferred in circumstances that imported any form of trust.
- Category: Substantive
- Breach of Fiduciary Duty
- Outcome: The court found that the defendants had not breached their fiduciary duties in transferring the monies because all the shareholders of Tanaka had unanimously assented to the transfer and retention of the Transferred Sum by Dato Ting and Datuk Tufail through their Joint Account.
- Category: Substantive
- Conspiracy
- Outcome: The court dismissed the counterclaim of conspiracy because the damage alleged was legal costs in defending this action on an indemnity basis.
- Category: Substantive
8. Remedies Sought
- Declarations that Datuk Tufail and Dato Ting held the Transferred Sum on trust
- Damages for breach of fiduciary duties
- Account of profits under s 157(3)(a) of the Companies Act
- Legal costs on an indemnity basis
9. Cause of Actions
- Breach of Trust
- Breach of Fiduciary Duty
- Unjust Enrichment
- Tort of Conspiracy
10. Practice Areas
- Commercial Litigation
- Corporate Law
- Tax Litigation
11. Industries
- Timber Trading
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Raffles Town Club Pte Ltd v Lim Eng Hock Peter and others (Tung Yu-Lien Margaret and others, third parties) | High Court | Yes | [2010] SGHC 163 | Singapore | Cited regarding the assent of shareholders to a matter which a general meeting of the company could carry into effect. |
| Raffles Town Club Pte Ltd v Lim Eng Hock Peter and others and other appeals | Court of Appeal | Yes | [2013] 1 SLR 374 | Singapore | Cited for the requirement of proving a predominant purpose by all the conspirators to cause injury or damage to the plaintiff in a claim for conspiracy by lawful means. |
| Quah Kay Tee v Ong and Co Pte Ltd | N/A | Yes | [1996] 3 SLR(R) 637 | N/A | Affirmed by Raffles Town Club Pte Ltd v Lim Eng Hock Peter and others and other appeals [2013] 1 SLR 374 regarding the requirement of proving a predominant purpose by all the conspirators to cause injury or damage to the plaintiff in a claim for conspiracy by lawful means. |
| EFT Holdings, Inc and another v Marinteknik Shipbuilders (S) Pte Ltd | N/A | Yes | [2014] 1 SLR 860 | N/A | Cited for the elements that must be satisfied to succeed on a claim of conspiracy by unlawful means. |
| Kuwait Oil Tanker Co SAK and another v Al Bader and others (No 3) | N/A | Yes | [2000] 2 All ER (Comm) 271 | N/A | Quoted in EFT Holdings, Inc and another v Marinteknik Shipbuilders (S) Pte Ltd [2014] 1 SLR 860 regarding the awareness of the surrounding circumstances and sharing the object for parties to an agreement. |
| Relfo Ltd (in liquidation) v Bhimji Velji Jadva Varsani | N/A | Yes | [2008] 4 SLR(R) 657 | N/A | Cited for the cause of action in knowing receipt is directed against a third party who knowingly receives trust property as a result of the trustee’s breach of fiduciary duties. |
| Sandz Solutions (Singapore) Pte Ltd and others v Strategic Worldwide Assets Ltd and others | Court of Appeal | Yes | [2014] 3 SLR 562 | Singapore | Cited for dismissing the counterclaim of tort of conspiracy on the basis that no damage had been suffered as a result of the alleged conspiracy other than the costs of defending the suit. |
| Lim Kok Lian (executor and trustee of the estate of Lee Biau Luan, deceased) v Lee Patricia (executor and trustee of the estate of Lee Biau Luan, deceased) and another | N/A | Yes | [2015] 1 SLR 1184 | N/A | Cited for the uncertainty of whether costs per se can constitute actionable damage for a claim in conspiracy. |
13. Applicable Rules
| Rule Name |
|---|
| Rules of Court (Cap 322, R5, 2014 Rev Ed) O 59 r 3(2) |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Transferred Sum
- Joint Account
- Oral Agreements
- Directors' Resolutions
- Malaysian Companies
- Tax Evasion
- Fiduciary Duties
- Conspiracy
15.2 Keywords
- trust
- fiduciary duty
- conspiracy
- timber
- Singapore
- Malaysian companies
- directors
- shareholders
- fraud
- evidence
16. Subjects
- Trusts
- Fiduciary Duties
- Company Law
- Commercial Disputes
- Taxation
17. Areas of Law
- Trust Law
- Fiduciary Duty
- Conspiracy
- Civil Procedure
- Company Law
- Tax Law