INTERCONTINENTAL HOUSING DEVELOPMENT LTD v. WANFONG NOMINEES LTD

1987, No. 11
(Civil)

IN THE COURT OF APPEAL

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J U D G M E N T

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Power, J.

1. This is an appeal by the 6th defendant Wanfong Nominees Limited against a refusal by Rhind, J. to strike out the amended points of claim on the ground that they disclose no reasonable cause of action against that defendant. The amended points of claim set out that Intercontinental Housing, the plaintiff, was controlled by Territorial Developments of which the 1st defendant Mr. Quek Teck Huat was a director and shareholder and the 2nd defendant Mr. Chew Kam Meng was a director. It is pleaded that Miss Doreen Yong, the third defendant, was the chief administrative officer of the plaintiff and was also a director of Dixon Limited which is the 7^th defendant. The Ka Wah Bank Limited, which is the 5th defendant, was the plaintiff’s bank and was also the bank for a number of other persons involved in the alleged conspiracy and the 6th defendant, the present appellant, Wanfong Nominees Limited was an entity which it is alleged had no business relationship with the plaintiff. So much for the parties involved in the action.

2. The pleadings allege that on about the 18th July 1985, Territorial Developments agreed to sell a controlling interest in the plaintiff to a company called Join Park Limited, we shall refer to this agreement as the share purchase agreement. At that time Seareef Investment Ltd. was indebted to the plaintiff in the sum of $89 m. and, under the share purchase agreement, Territorial agreed to procure the payment thereof to the plaintiff. About a month later, on or about the 16th of August, Territorial delivered audited accounts of the plaintiff to Join Park showing inter alia, that the plaintiff was the owner of a number of quoted investments held by Ariffin & Low Securities, who are, we think we are right in saying, Singapore stock brokers and also showing that the plaintiff had debtors in the sum of $14m. of which $10 m. was owed by those stock brokers. Territorial agreed, it is pleaded, through Law Chang Hian, a director and executive vice president of the 5th defendant, the bank, that it would procure the sale of the quoted investments and payment of the proceeds of that sale by banker's draft; the repayment by banker's draft of the stock broker's debt and the payment by banker’s draft of interest on the Seareef debt from June 1985 to the date of repayment.

3. All of the events with which we are dealing took place within the space of two or three days. On or about 17th August, Territorial transferred 77 million shares in the plaintiff to Join Park. At about that time territorial delivered three cashier orders in the total sum of $127m. to Join Park. One of these, which was for $91 m., was repayment of the Seareef debt with interest; one, which was of $26 m., was payment of the amount of the quoted investment and the third, which was for $10 m., was repayment of the stock broker's debt. The three cashier orders were paid into the plaintiff's account with the 5th defendant. It is alleged that shortly before this, on or about the 15th August, the 1st and the 2^nd defendants who were, as we have said, directors of the plaintiff, acting on .behalf of the plaintiff, drew eight cheques dated the 17th of August in the sum of $127 m. on the plaintiff’s account. These cheques were crossed and bore the words “Pay Cash or Bearer” although, it seems, nothing as far as the 6th defendant is concerned, turns upon that.

4. On the 17th of August, the 8 cheques were paid into the 7th defendant, Dixon Limited's account with the bank. It is alleged that on or about the 15th of August again, two or three days before the actual transaction with which we are principally concerned, the 3rd defendant, who it will be remembered was the chief administrative officer of the plaintiff and a director of Dixon, drew on behalf of Dixon eight cheques in the sum of $127 m. on Dixon’s account with the bank. These cheques were also crossed and also bore the words “Pay Cash or Bearer”. On or about the 17th of August, these cheques were paid into the appellant, the 6th defendant's account which was also with the bank. The plaintiff alleges that none of the cheques were drawn bona fide and that all of the defendants are involved in a fraudulent conspiracy. It is important to note, as pleaded in paragraphs 14(c) and 14(h), that the three cashier orders were issued upon application made by the appellant at a time when it had no funds and no credit facilities and that the funds were recycled to it through the 7th defendant’s account at a time when, according to the pleading, the appellant had no dealings with the plaintiff or any of its subsidiaries and that its account with the bank vas never debited with the amount of the three cashier orders until after the recycled amount was paid therein.

5. The appellant contends that no prima facie case of fraud against it has been established by the pleadings. According to the facts pleaded, the appellant had financed the transaction by applying for the three cashier orders, had no business relationship with the plaintiff and had, in the end, within a very short space of time, received back into its account exactly the amount of money that it had paid out. The judge was satisfied that these facts gave rise to a reasonable inference of fraud.

6. The appellant when challenging that decision relies upon the fact that there was no specific allegation of a fraudulent act and, in particular, that there was no allegation of knowledge of fraud on its part, This is not a matter that really allows of much elaboration. We are satisfied that if a pleading contains a clear allegation of fraud and pleads facts from which an inference of knowledge of that fraud can be drawn, there is no necessity to plead specifically that there was fraudulent knowledge, The pleading of a plaintiff alleging fraud, who relies upon primary facts capable of giving rise to an inference of fraudulent knowledge, and who pleads those facts is not insufficient merely because it does not in addition include a bald allegation that the defendant has knowledge of the fraud - or allegation which must in any event be implicit in the allegation that the defendant “fraudulently conspired”. The trial judge was satisfied that the facts did support such an inference and we are satisfied that he was right in so holding.

7. It was further contended in the grounds of appeal that the trial judge should not have given an indication that, if he was wrong in holding as he did, he would have given leave to amend if it had been sough. This ground has however not been canvassed before us, and it is not necessary to say anything further thereon. The appeal is dismissed.