SUPREME COURT OF SINGAPORE
7 February 2024
Case summary
Alternative Advisors Investments Pte Ltd v Asidokona Mining Resources Pte Ltd [2024] SGCA 3
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Decision of the Court of Appeal (delivered by Justice Steven Chong):
Outcome: The Court of Appeal dismisses an appeal against a decision denying recovery under a loan agreement to which the appellant was not a party. The Court of Appeal affirms that the purported agent did not have the requisite authority to enter into the loan agreement at the time it was made. It affirms the decision that there was no valid ratification of the loan agreement by the named lender. It clarifies that there is no legal requirement for a party seeking to ratify a loan agreement to show that it had provided the funds for the loan, but finds that, on the facts, the source of the funds was essentially an evidential point.
1 This is an appeal against the decision of the Appellate Division of the High Court (“AD”), which overturned the decision of the General Division of the High Court (“GDHC”).
Background to the appeal
2 This appeal concerns an action brought in the GDHC for repayment of a loan of $2m (the “Loan”) under a written contract (the “Loan Agreement”) between Supreme Star Investments Ltd (“SSI”) and the first respondent, Asidokona Mining Resources Pte Ltd (“Asidokona”). Asidokona’s sole director and shareholder is the second respondent, Mr Soh Sai Kiang (“Mr Soh”).
3 Alternative Advisors Investments Pte Ltd (“AAI”) is a Singapore-incorporated company carrying on the business of providing professional services to companies and investors. Its managing director is Mr Wong Joo Wan (“Mr Wong”). Mr Soh and Mr Wong are old acquaintances.
4 SSI’s sole shareholder and director is Ms Lou Swee Lan (“Ms Lou”).
5 The solicitor who arranged the Loan between the parties was Mr Ong Su Aun Jeffrey (“Mr Ong”), who was, at the time, an advocate and solicitor and the managing partner of JLC Advisors LLP (“JLC Advisors”).
Facts
6 In June 2016, Mr Soh approached Mr Wong to seek assistance to procure a loan of $2m for Asidokona (ie, the Loan). Mr Wong approached Mr Ong, who informed him that he had a client who would be willing to contribute the other half of the Loan but did not reveal the identity of the client. The client was simply referred to as a “HK investor”. Mr Ong drew up the Loan Agreement in which SSI was the named lender and Asidokona was the named borrower.
7 On 22 July 2016, Mr Soh duly executed the Loan Agreement, a share charge and a personal guarantee (the “Loan Documents”) on behalf of Asidokona at JLC Advisors’ office. However, the Loan Agreement was not signed by SSI at that time. Nevertheless, on that same day, the Loan was disbursed by JLC Advisors.
8 By May 2017, Asidokona had defaulted on the Loan. As at 15 May 2017, Asidokona failed to redeem the Loan and a statutory demand in the name of SSI was issued to Mr Soh through JLC Advisors on the same day.
9 It was eventually decided that Mr Wong would arrange for AAI to take over the Loan from SSI, and SSI purportedly assigned its interest under the Loan Agreement to AAI.
10 Thereafter, SSI purportedly assigned its interest under the Loan Agreement to AAI through two deeds of assignment.
11 It was only around June or July 2018 that the Loan Agreement (which was then still unsigned by SSI) was executed by Mr Wong, purportedly on SSI’s behalf.
12 On 20 July 2018, AAI commenced HC/S 734/2018.
13 Prior to the commencement of the trial, owing to Ms Lou’s answers to interrogatories in 2021 where she denied, for the first time, any knowledge of the Loan and the purported authorisation of Mr Wong, Mr Wong’s authority to sign the Loan Documents, which had previously been accepted by Asidokona and Mr Soh, was called into question. This triggered a further round of amendments to the pleadings following which SSI passed a resolution in 2021 (the “Resolution”) to approve, inter alia, the prior execution of the Loan Documents by Mr Wong.
14 The GDHC found in favour of AAI. This was reversed on appeal to the AD.
Decision on appeal
15 The court found that Mr Wong did not have authority from AAI to enter into the Loan Agreement in 2016. Since the GDHC did not make a finding on the issue of authority, it followed that it remained unproved that Mr Wong had been authorised by SSI to enter into the Loan Agreement in 2016. A submission of a “no case to answer” only shifts the burden of proof if a prima facie case has been established. Since the GDHC found that AAI had proven its case only on the ground of ratification, the burden to prove Mr Wong’s authority remained with AAI, and AAI did not raise this issue on appeal before the AD. The court rejected AAI’s assertion that Asidokona and Mr Soh had admitted that SSI was a party to the Loan Agreement in their pleadings: at [56], [59], [63] and [64].
16 The court found that SSI did not authorise Mr Wong to enter into the Loan Agreement, relying primarily on Ms Lou’s evidence and the lack of evidence suggesting that SSI had provided funds for the Loan: at [67], [73] and [75].
17 A party is not required to show that it had provided funds for a loan as a precondition to ratify a loan contract: at [83].
18 The key act to be ratified for SSI to have a valid cause of action would be the acts of Mr Wong in 2016. But the Loan Agreement was not validly ratified because Mr Wong did not purport to act on SSI’s behalf in 2016, which was the material time at which the Loan Contract was negotiated and concluded: at [94], [95] and [98].
This summary is provided to assist in the understanding of the Court’s grounds of decision. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s grounds of decision.