Legal News & Analysis – Asia Pacific – Singapore – Dispute Resolution

Court of Appeal holds that a plaintiff has no remedy against a defendant under the law of unjust enrichment where the plaintiff and a third party enter into a contract under which the plaintiff is required to confer a benefit directly on the defendant.

 
The Plaintiffs in this matter had contracted to sell a sum of shares to one of the Defendants. As part of the transaction, a large portion of the purchase price was paid to two companies, Aventi and OAFL, in the form of cash and shares. However, the Plaintiffs then claimed that Tjong, one of the Plaintiffs, should have received the purchase sum instead, and brought an action for unjust enrichment and conversion.

 
The Court of Appeal held that the parties in reality intended for Aventi and OAFL to receive the payments as third party beneficiaries, thus disposing of the claim entirely. The Court further considered the parties’ submissions and found that an unjust enrichment claim could not stand where a plaintiff and a third party entered into a contract to confer a benefit on the defendant, much like the situation in the present case. To permit a plaintiff’s unjust enrichment claim in these cases would undermine the contract and the contractual allocation of risk between the plaintiff and the third party. The conversion claim also could not stand as the Plaintiffs did not have a right to immediate possession of the shares which formed part of the purchase price.

 
One of the Defendants in the claim was Alwie, the sole director and shareholder of OAFL. Although the claim ultimately failed, the Court of Appeal accepted the Plaintiffs’ submission that Alwie was the alter ego of OAFL. It held that the corporate veil was rightly lifted as Alwie controlled OAFL and made no distinction between himself and the company.

For further information, please contact:

Francis Xavier SC, Partner, Rajah & Tann
[email protected]

 
Lai Yew Fei, Partner, Rajah & Tann
[email protected]

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