SINGAPORE: The High Court on Wednesday (Apr 9) dismissed a businessman’s suit against two Chinese news veterans over a loan of S$990,000 (around US$733,600). 

Mr Ren Xin Wu had given the purported loan to Mr Chua Chim Kang, the former head of Mediacorp’s Chinese news team, and Ms Lee Kuan Fung, a former news veteran with Chinese daily Lianhe Zaobao from Singapore Press Holdings (SPH).

The sum was allegedly a working capital for two businesses that provided tuition and specialised in Chinese-language programmes and events.

The holdings company – called Homing Holdings - was ordered to wind up in January 2021.

Mr Chua stepped down from his role as head and chief editor of Chinese news and current affairs at Mediacorp in February, saying he resigned due to health reasons.

Ms Lee had spent 18 years at SPH before leaving in May 2017, her LinkedIn profile showed. 

In getting Ms Lee and Mr Chua to return the S$990,000 to him, Mr Ren later sued them both, claiming that it was an interest-free loan repayable in three years from 2017 when it was given.

However, Mr Chua and Ms Lee's lawyers alleged that there was no such agreement. 

Delivering his verdict on Wednesday, Judicial Commissioner Mohamed Faizal said the agreement entered by the three parties bore a clause that specifically stated that the money was loaned “on a no-guarantee” basis.

Given the clear language of the clause of the agreement, he added that the parties agreed to “squarely put the risk of non-return” on Mr Ren if the business did not “blossom" in the way that the parties had hoped. 

BACKGROUND OF THE CASE

The court heard from the defendants' opening statement that Mr Ren, a citizen of China and a Canadian resident, first met Mr Chua in 2015 when the latter was an executive with SPH.

At the time, Mr Chua had been in the news media industry for about 15 years.

Over a social lunch, Mr Ren mentioned that he wanted to promote and raise the profile of an event for China Minsheng Investment Group, the defence said.

In the capacity of his role at SPH, Mr Chua then introduced Ms Lee to Mr Ren since she was in a position at SPH where she could assist him.

Mr Ren later had a successful project with SPH, the defence said in its opening statement.

The trio later met to celebrate the success and had subsequent lunches, where Mr Ren purportedly persuaded the two news veterans to start a business with him.

Homing Holdings was incorporated in June 2017. It was the holding company for the operating companies Luminaries Holdings and Lulele Learning. 

On July 26 in 2017, the parties entered an agreement, which stated that Mr Ren would invest S$10,000 into Homing Holdings for a 35 per cent share.

Mr Chua and Ms Lee would “commit to management and intellectual property” in return for a 35 per cent and 30 per cent share of Homing respectively.

The agreement also bore a clause stating that Mr Ren would extend a loan of S$990,000 to Homing Holdings on a “no guarantee, interest-free basis for a duration of three years” – above and beyond his equity investment of S$10,000. 

SUIT AGAINST MR CHUA AND MS LEE 

In the written judgment, it was stated that the main issue of Mr Ren’s claim was whether the loan agreement between the three shareholders contained an implied term that sought to impose duties on Ms Lee and Mr Chua to procure the return of the loan from Homing Holdings.

During the civil trial, which opened in the High Court last November, both Mr Chua and Ms Lee denied that the agreement had the effect of a personal guarantee that would render them personally liable, pointing that this would fall within the ambit of a “special promise” under the Civil Law Act.

They argued that since there was no such personal guarantee in writing or that it was signed by Mr Chua and Ms Lee, no action shall be brought against them.

They also submitted that personal liability was never envisioned under the agreement, since one of the clauses specifically provided that the loan was on a “no guarantee, interest-free basis”.

On his part, Mr Ren alleged that sometime in August 2020, he had spoken to Mr Chua over the phone about the return of the loan. 

In his affidavit, he testified that during phone calls on Aug 3 and 4 in 2020, Mr Chua had agreed to a return of the loan by transferring S$210,000 from Homing Holdings to Mr Ren within two days.

The two men would then transfer all of their shares to Ms Lee.

Following that, Homing Holdings would provide a contract to pay Mr Ren a sum of S$765,000 with interest over the next one to three years.

However, Judicial Commissioner Faizal said that because the agreement had a clause that specifically states that the money was being loaned “on a no guarantee” basis, it fortified the conclusion that the loan was provided to Homing Holdings without any assurances, promises or confirmation on outcomes or results.

Turning to an audio file that Mr Ren submitted during the trial – of a conversation between Mr Ren and Mr Chua suggesting that such an agreement did take place – the judge further said that the extract provided “little to no” context to it. 

In his written judgment, he also said it was clear that Mr Ren was “actively painting an inaccurate picture” of the phone conversations between himself and Mr Chua.

He noted that Mr Ren was "literally saying nothing in response ... except stock phrases or platitudes". At times, Mr Ren even persuaded Mr Chua to "think twice about promising such things to his own detriment”.

“Not only does the stark difference between Mr Chua’s and Mr Ren’s responses suggest that Mr Ren was, in essence, laying the groundwork for Mr Chua to say things he was seeking to surreptitiously record, but the entire flow of conversation is impossible to appreciate or understand in the absence of badly needed context,” the judge continued.

The extract of the recording that Mr Ren put forth had lacked the clarity and nuance necessary to determine the true nature of the interaction.

The jduge added that even if it were taken at face value, it was “immediately obvious” that there was every chance that this was an “intentionally incomplete and misleading” piece of evidence.

Moreover, he noted that Mr Chua could not have promised a transfer of S$210,000 from Homing Holdings to Mr Ren since he could not decide matters for the company on his own.

Judicial Commissioner Faizal said that Mr Ren was “not the most credible” of witnesses, explaining that there was a “marked shift” observed from the evidence he provided in his affidavit to his oral evidence on the stand. 

“In particular, Mr Ren’s evidence in court appeared to be so slanted that it was difficult to accord it any credit,” he added, noting that Mr Ren had adopted conspiratorial stances on “almost anything” that Ms Lee and Mr Chua did over the course of their business venture.  

This included Mr Ren's stance that the entire business of Homing Holdings was an elaborate hoax engineered by Ms Lee and Mr Chua to defraud him of his money, as well as his suggestion that Ms Lee had “destroyed all the evidence” and was in the habit of “using company funds to resolve her personal issues”.

SUIT AGAINST GOLDCITI AND MS LEE 

On Wednesday, the High Court also dismissed another suit against Ms Lee and Goldciti, a company hired to provide restructuring advice to Homing Holdings when it was threatened with proceedings to wind up the business. 

The suit was filed by liquidators for Homing Holdings, with the suing parties claiming that Ms Lee had caused Homing Holdings to enter into a sham agreement with Goldciti to siphon funds from the former.

Homing Holdings sought to recover the sum of S$40,000 paid under the alleged sham agreement for services that were never rendered, as well as to hold Ms Lee liable for breaching her fiduciary duties as director of the company.

Another accusation was that Ms Lee had conspired with Goldciti to defraud Homing Holdings and caused it to suffer a financial loss.

To support the allegation that it was a sham transaction, the liquidators pointed to the “extremely belated” production of two documents – a proposal between Homing Holdings and Goldciti entered on Sep 30, 2020, and the Goldciti report – which suggested that the documents were manufactured at a later date.

Despite having sought these documents from Ms Lee and Goldciti on numerous occasions, Homing Holdings claimed that the Goldciti report was produced only on Nov 16, 2022, two months after formal legal proceedings began.  

On Wednesday, the judge ruled that the transaction was not a sham because the liquidators did not discharge their burden of proving on a balance of probabilities that this was the case. 

He gave a lot of weight to the testimony of Ms Yessica Budiman, one of the people representing the liquidators for Homing Holdings.

It seemed that she had “accepted” during cross-examination that the arrangements were not likely to be a sham as had been suggested by the contents of her affidavit, the judge added.

His judgment was that her concessions were an “all-but-fatal” turn to the claim.

Addressing the point that the liquidators made about Goldciti and Ms Lee failing to produce an original soft copy of the Goldciti report, the judge said that the misplacement of original soft copies of documents is a “common, unintentional and frustrating feature of our daily lives”. 

The liquidators had alleged that the report was fabricated to legitimise a payment of S$80,000 from Homing Holdings to Goldciti for providing advice on restructuring options.

They also alleged that it was not prepared in November 2020 but was backdated to give an appearance of services rendered.

However, the judge said that such lack of an original soft copy cannot, in and of itself, be grounds for inferring malicious intentions, adding that it was highly unlikely that the report would have been fabricated from scratch.