Eller v Cheong: Breach of Trust & Share Issuance Dispute in Medical Device Distribution

In Eller v Cheong, the High Court of Singapore addressed a breach of trust claim. Urs Eller, the plaintiff, sued Cheong Kiat Wah, the defendant, for breaching a trust deed by issuing additional shares in Swiss Medicare Sdn Bhd without Eller's consent, diluting his shareholding. The court found Cheong liable for breaching the trust deed but ordered a separate assessment to determine the quantum of compensatory relief payable to Eller.

1. Case Overview

1.1 Court

High Court of the Republic of Singapore

1.2 Outcome

Interlocutory judgment is entered for the plaintiff as regards the defendant’s liability for breaching Clause 3.3 read with Clause 3.4(b) of the Trust Deed.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

The High Court found Cheong liable for breaching a trust deed by issuing shares without Eller's consent, diluting Eller's stake in Swiss Medicare Sdn Bhd.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Urs EllerPlaintiffIndividualInterlocutory judgment for the plaintiffPartial
Cheong Kiat WahDefendantIndividualLiability foundLost

3. Judges

Judge NameTitleDelivered Judgment
Vincent HoongJudgeYes

4. Counsels

Counsel NameOrganization
Cai Enhuai AmosYuen Law LLC
Wong Changyan ErnestYuen Law LLC
Pang Khin WeeHoh Law Corporation

4. Facts

  1. The plaintiff and defendant agreed to invest MYR350,000 each in a company to distribute medical devices in Malaysia.
  2. The plaintiff could not formally register his shareholding due to a non-compete duty with his former employer.
  3. The parties executed a trust deed where the defendant held 50 shares on trust for the plaintiff.
  4. The defendant caused the company to issue 350,000 additional shares in his own name.
  5. The plaintiff alleges this share issuance breached the trust deed, diluting his shareholding without his agreement.
  6. The defendant claims the plaintiff knew and approved of the share issuance.
  7. The plaintiff sought equitable compensation for the loss suffered from the dilution of his shareholding.

5. Formal Citations

  1. Eller, Urs v Cheong Kiat Wah, Suit No 176 of 2019, [2020] SGHC 106

6. Timeline

DateEvent
Swiss Medicare Sdn Bhd registered
Partnership agreement drafted
Loan Agreement executed
Trust Deed executed
Share Issuance executed
Plaintiff appointed as a director of the Company
Plaintiff signed off on the Company’s first audited financial report
Disagreement between the plaintiff and the defendant
Plaintiff sent a letter to the defendant recalling the Loan Sum with interest
Plaintiff ceased to be a director of the Company
Defendant sent a letter to the plaintiff setting out what he believed to be the correct interest sum
Plaintiff sent another letter to the defendant, alleging that the defendant had breached the Trust Deed
Plaintiff commenced the present action
Notes of Evidence
Notes of Evidence
Judgment reserved
Judgment

7. Legal Issues

  1. Breach of Trust
    • Outcome: The court found that the defendant breached the trust deed by issuing shares without the plaintiff's consent.
    • Category: Substantive
    • Sub-Issues:
      • Unauthorised share issuance
      • Dilution of shareholding
  2. Admissibility of Evidence
    • Outcome: The court ruled on the admissibility of various pieces of evidence, including lay opinion, negotiation evidence, hearsay legal opinion, and scandalous statements.
    • Category: Procedural
    • Sub-Issues:
      • Lay opinion evidence
      • Negotiation evidence
      • Hearsay legal opinion
      • Scandalous statements
  3. Equitable Defenses
    • Outcome: The court rejected the defendant's equitable defenses, including unclean hands, laches, acquiescence, estoppel, and waiver.
    • Category: Substantive
    • Sub-Issues:
      • Unclean hands
      • Laches
      • Acquiescence
      • Estoppel
      • Waiver

8. Remedies Sought

  1. Equitable Compensation
  2. Order for the defendant to buy out his shares in the Company

9. Cause of Actions

  • Breach of Trust

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Medical Device Distribution

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Leong Wing Kong v Public ProsecutorHigh CourtYes[1994] 1 SLR(R) 681SingaporeCited regarding the definition of an expert.
Public Prosecutor v Muhamed bin SulaimanHigh CourtYes[1982] 2 MLJ 320MalaysiaCited regarding the definition of an expert.
Poh Fu Tek and others v Lee Shung Guan and othersHigh CourtYes[2018] 4 SLR 425SingaporeCited regarding the valuation of shares.
Tan Joon Wei Wesley v Lee Kim WeiHigh CourtYes[2013] SGHCR 24SingaporeCited regarding the purpose of section 32B(3) of the Evidence Act.
Sim Cheng Soon v BT Engineering Pte Ltd and anotherHigh CourtYes[2007] 1 SLR(R) 148SingaporeCited regarding laypersons adducing opinion evidence.
Koh Lau Keow and others v Attorney-GeneralCourt of AppealYes[2014] 2 SLR 1165SingaporeCited regarding the admissibility of extrinsic evidence for the purposes of construing a trust deed.
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte LtdCourt of AppealYes[2008] 3 SLR(R) 1029SingaporeCited regarding the admissibility of evidence of previous negotiations for the purposes of contractual interpretation.
Xia Zhengyan v Geng ChangqingCourt of AppealYes[2015] 3 SLR 732SingaporeCited regarding the requirements for admissibility of evidence of prior negotiations.
Vandervell v Inland Revenue CommissionersHouse of LordsYes[1967] 2 AC 291United KingdomCited regarding the extension of principles governing the interpretation of contracts to the interpretation of deeds, including trust deeds.
Byrnes v KendleHigh Court of AustraliaYes(2011) 243 CLR 253AustraliaCited regarding the extension of principles governing the interpretation of contracts to the interpretation of deeds, including trust deeds.
Browne v DunnHouse of LordsYes6 R 67United KingdomCited regarding the rule in Browne v Dunn, which requires parties to put contradictory facts to a witness during cross-examination.
Hong Leong Singapore Finance Ltd v United Overseas Bank LtdHigh CourtYes[2007] 1 SLR(R) 292SingaporeCited regarding the principles relating to the 'unclean hands' defence.
Dering v Earl of WinchelseaCourt of ChanceryYes[1775–1802] All ER Rep 140United KingdomCited regarding the 'unclean hands' defence.
E C Investment Holding Pte Ltd v Ridout Residence Pte Ltd and others and another appealCourt of AppealYes[2012] 1 SLR 32SingaporeCited regarding the 'unclean hands' defence.
Clearlab SG Pte Ltd v Ting Chong Chai and othersHigh CourtYes[2015] 1 SLR 163SingaporeCited regarding the fiduciary duties of an employee to his employer.
University of Nottingham v FishelEmployment Appeal TribunalYes[2000] ICR 1462United KingdomCited regarding the fiduciary duties of an employee to his employer.
Lonmar Global Risks Limited (formerly SBJ Global Risks Limited) v Barrie WestHigh Court of JusticeYes[2010] EWHC 2878 (QB)United KingdomCited regarding the fiduciary duties of an employee to his employer.
Richard Hugh Frame v Eleanor Margaret SmithSupreme Court of CanadaYes[1987] 2 SCR 99CanadaCited regarding the fiduciary duties of an employee to his employer.
Susilawati v American Express Bank LtdCourt of AppealYes[2009] 2 SLR(R) 737SingaporeCited regarding the fiduciary duties of an employee to his employer.
V Nithia (co-administratrix of the estate of Ponnusamy Sivapakiam, deceased) v Buthmanaban s/o Vaithilingam and anotherCourt of AppealYes[2015] 5 SLR 1422SingaporeCited regarding the general rule that the court is precluded from deciding on any matter which the parties have not put into issue.
OMG Holdings Pte Ltd v Pos Ad Sdn BhdCourt of AppealYes[2012] 4 SLR 231SingaporeCited regarding the general rule that the court is precluded from deciding on any matter which the parties have not put into issue.
Cytec Industries Pte Ltd v APP Chemicals International (Mau) LtdHigh CourtYes[2009] 4 SLR(R) 769SingaporeCited regarding the equitable defence of laches.
Sukhpreet Kaur Bajaj d/o Manjit Singh v Paramjit Singh BajajHigh CourtYes[2008] SGHC 207SingaporeCited regarding the equitable defence of laches.
Re Estate of Tan Kow QueeHigh CourtYes[2007] 2 SLR(R) 417SingaporeCited regarding the equitable defence of laches.
Chng Weng Wah v Goh Bak HengCourt of AppealYes[2016] 2 SLR 464SingaporeCited regarding the equitable defence of laches.
Genelabs Diagnostics Pte Ltd v Institut Pasteur and anotherCourt of AppealYes[2000] 3 SLR(R) 530SingaporeCited regarding the doctrine of acquiescence.
Tan Yong San v Neo Kok Eng and othersHigh CourtYes[2011] SGHC 30SingaporeCited regarding the doctrine of acquiescence.
Koh Wee Meng v Trans Eurokars Pte LtdHigh CourtYes[2014] 3 SLR 663SingaporeCited regarding the doctrine of acquiescence.
S Pathmanathan v AmaravathiFederal CourtYes[1979] 1 MLJ 38MalaysiaCited regarding the doctrine of acquiescence.
Nanyang Medical Investments Pte Ltd v Kuek Bak Kim Leslie and othersHigh CourtYes[2018] SGHC 263SingaporeCited regarding the defence of promissory estoppel.
Oriental Investments (SH) Pte Ltd v Catalla Investments Pte LtdCourt of AppealYes[2013] 1 SLR 1182SingaporeCited regarding the defence of promissory estoppel.
Chng Bee Kheng v Chng Eng ChyeCourt of AppealYes[2013] 2 SLR 715SingaporeCited regarding the defence of promissory estoppel.
Audi Construction Pte Ltd v Kian Hiap Construction Pte LtdCourt of AppealYes[2018] 1 SLR 317SingaporeCited regarding the defence of waiver.
Tractors Singapore Ltd v Pacific Ocean Engineering & Trading Pte LtdHigh CourtYes[2020] SGHC 60SingaporeCited regarding the defence of waiver.
Aero-Gate Pte Ltd v Engen Marine Engineering Pte LtdCourt of AppealYes[2013] 4 SLR 409SingaporeCited regarding the defence of waiver.
Nocton v Lord AshburtonHouse of LordsYes[1914] AC 932United KingdomCited regarding the term 'equitable compensation'.
Target Holdings Ltd v Redferns (a firm) and anotherHouse of LordsYes[1996] 1 AC 421United KingdomCited regarding equitable compensation.
AIB Group (UK) plc v Mark Redler & Co SolicitorsSupreme CourtYes[2015] AC 1503United KingdomCited regarding equitable compensation.
Quality Assurance Management Asia Pte Ltd v Zhang Qing and othersHigh CourtYes[2013] 3 SLR 631SingaporeCited regarding equitable compensation.
Sim Poh Ping v Winsta Holding Pte Ltd and another and other appealsCourt of AppealYes[2020] SGCA 35SingaporeCited regarding equitable compensation.
Tongbao (Singapore) Shipping Pte Ltd and another v Woon Swee Huat and othersCourt of AppealYes[2019] 5 SLR 56SingaporeCited regarding equitable compensation.
Cheong Soh Chin and others v Eng Chiet Shoong and othersCourt of AppealYes[2019] 4 SLR 714SingaporeCited regarding equitable compensation.
Agricultural Land Management Ltd v Jackson and Others (No 2)Supreme Court of Western AustraliaYes[2014] WASC 102AustraliaCited regarding equitable compensation.
Yip Man and Goh Yihan, “Navigating the Maze: Making Sense of Equitable Compensation and Account of Profits for Breach of Fiduciary DutySingapore Academy of Law JournalYes[2016] 28 SAcLJ 884SingaporeCited regarding equitable compensation.
Lee Chee Wei v Tan Hor Peow Victor and others and another appealCourt of AppealYes[2007] 3 SLR(R) 537SingaporeCited regarding the bifurcation of the trial.
Chew Ai Hua Sandra v Woo Kah Wai and another (Chesney Real Estate Pte Ltd, third party)High CourtYes[2013] 3 SLR 1088SingaporeCited regarding the bifurcation of the trial.
Libertarian Investments Ltd v Thomas Alexej HallCourt of First InstanceYes[2014] 1 HKC 368Hong KongCited regarding the remedy of falsification.

13. Applicable Rules

Rule Name
Order 41 r 6 of the Rules of Court
O 38 r 2(5) of the ROC
O 33 r 2 of the ROC

14. Applicable Statutes

Statute NameJurisdiction
Evidence Act (Cap 97, 1997 Rev Ed)Singapore
Rules of Court (Cap 322, R 5, 2014 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Trust Deed
  • Share Issuance
  • Equitable Compensation
  • Beneficial Owner
  • Nominee
  • Reserved Matters
  • Unclean Hands
  • Laches
  • Acquiescence
  • Estoppel
  • Waiver

15.2 Keywords

  • Trust
  • Breach of Trust
  • Share Issuance
  • Equity
  • Singapore
  • Medical Devices
  • Distribution
  • Non-Compete
  • Fiduciary Duty

17. Areas of Law

Area NameRelevance Score
Trust Law95
Breach of Trust90
Equitable Compensation80
Evidence70
Civil Procedure60
Contract Law50
Estoppel40
Costs20

16. Subjects

  • Trust Law
  • Equity
  • Civil Litigation
  • Evidence