Case Details
- Citation: [2021] SGCA 12
- Case Title: Ang Jian Sheng Jonathan and another v Lyu Yan
- Court: Court of Appeal of the Republic of Singapore
- Decision Date: 23 February 2021
- Civil Appeal No: Civil Appeal No 128 of 2020
- Judges (Coram): Sundaresh Menon CJ; Andrew Phang Boon Leong JCA; Belinda Ang Saw Ean JAD
- Parties: Ang Jian Sheng Jonathan — Lim Zhengde — Lyu Yan @ Lu Yan
- Plaintiff/Applicant: Ang Jian Sheng Jonathan and another
- Defendant/Respondent: Lyu Yan
- Legal Areas: Contract — Illegality and public policy
- Procedural History: Appeal from the High Court decision in Lyu Yan v Lim Tien Chiang [2020] SGHC 145
- Counsel (Appellants): Chooi Jing Yen and Joel Wong En Jie (Eugene Thuraisingam LLP)
- Counsel (Respondent): Jimmy Yap (Jimmy Yap & Co)
- Judgment Length: 7 pages, 3,804 words
- Key Issues (as framed by the Court of Appeal): (1) Whether “Allan” existed; (2) Whether the rule in Foster v Driscoll barred the respondent’s non-contractual claims
Summary
In Ang Jian Sheng Jonathan and another v Lyu Yan ([2021] SGCA 12), the Court of Appeal upheld the High Court’s decision allowing the respondent, Lyu Yan, to recover losses arising from a failed international remittance scheme. The appellants, Jonathan and Derek, were intermediaries engaged to convert and remit funds from China to Singapore. Their defence was that they had passed the money to a third party, “Allan”, who then absconded. The Court of Appeal rejected that defence, finding that Allan was fictitious and that the appellants had not discharged the burden of proving Allan’s existence.
The Court of Appeal also addressed the appellants’ attempt to invoke the English Court of Appeal’s decision in Foster v Driscoll [1929] 1 KB 470. The appellants argued that the rule in Foster v Driscoll should defeat all of Lyu Yan’s non-contractual claims. The Court of Appeal held that the rule only applies where the claimant intended, or at least knew, that the transaction would violate the relevant foreign law. On the evidence, Lyu Yan did not know that the second remittance transaction violated Chinese law; she believed the transaction structure was a legitimate workaround. Accordingly, Foster v Driscoll did not bar her claims.
What Were the Facts of This Case?
Lyu Yan was a private bank customer of BNP Paribas Singapore (“BNP”). She wished to remit money from her bank accounts in China to her Singapore bank accounts. BNP’s relationship manager referred her to Joseph, who was engaged to assist with remittances. This background matters because it contextualises how Lyu Yan came to rely on intermediaries and how the remittance was structured through multiple layers of accounts and counterparties.
In September 2018, Lyu Yan instructed Joseph to transfer the equivalent of US$3m in RMB from her Chinese accounts to her Singapore account with Credit Suisse (the “First Transaction”). For that transaction, Joseph used a licensed Indonesian remittance company. Lyu Yan transferred funds from her China accounts to other China accounts nominated by Joseph, and she received the US dollar equivalent in her Singapore account from a Hong Kong bank account. This first transaction functioned as a “proof of concept” for Lyu Yan, reinforcing her belief that the overall arrangement could be legitimate.
In October 2018, Lyu Yan engaged Joseph again for another remittance (the “Second Transaction”), which is the subject of the appeal. On 16 October 2018, she agreed to convert RMB21,075,000 to US$3m at a specified exchange rate and to remit the USD from her China Merchant Bank account to her Singapore BNP account. For the Second Transaction, Joseph enlisted Jonathan and Derek (the first and second appellants) to assist. Lyu Yan transferred the RMB to various China accounts nominated by Joseph, who in turn obtained those accounts from Jonathan and Derek. Between 17 and 18 October 2018, Jonathan and Derek transferred the money away. The funds then disappeared.
After the loss, Lyu Yan pursued Joseph for the money, who in turn pursued Jonathan and Derek. Derek eventually told Joseph that his counterparty was someone called “Allan”. Derek added Joseph to a WhatsApp group chat called “Fast Remittance” that included Derek, Allan and Jonathan. In that chat, Allan purported to provide assurances that he would make the transfers, but he stopped replying on 22 October 2018. The appellants’ narrative was that Allan existed and absconded, whereas Lyu Yan’s case was that Jonathan and Derek had misappropriated the funds and fabricated Allan to conceal their wrongdoing.
What Were the Key Legal Issues?
The Court of Appeal identified two principal issues. First, it had to determine whether “Allan” existed. This was not merely a factual dispute; it was central to the appellants’ defence. If Allan was real and the money was passed to him, then Jonathan and Derek might not have misappropriated Lyu Yan’s funds. Conversely, if Allan was fictitious, the appellants’ explanation would collapse and the claims based on conspiracy, unjust enrichment, and related wrongdoing would stand.
Second, the Court of Appeal had to consider whether the rule in Foster v Driscoll barred Lyu Yan’s non-contractual claims. The appellants contended that because Lyu Yan’s remittance arrangements were allegedly illegal under Chinese law, her claims should be defeated on public policy grounds. The key legal question was therefore the mental element required to trigger the Foster v Driscoll rule: whether Lyu Yan intended, or at least knew, that the Second Transaction violated Chinese law.
In addition, the Court of Appeal expressed some doubt about whether negligence should be allowed alongside claims founded on intentional wrongdoing (conspiracy and unjust enrichment). While the outcome did not turn on negligence because Lyu Yan only needed to succeed on one cause of action, the Court’s discussion is relevant for practitioners assessing how illegality and intentional misrepresentation interact with negligence in pleading strategy.
How Did the Court Analyse the Issues?
1. Burden of proof and the existence of “Allan”
The Court of Appeal began by addressing burden of proof. It held that Jonathan and Derek bore the burden of proving that Allan existed. The Court gave two reasons. First, the admitted facts were that Lyu Yan gave Jonathan and Derek her money and that the money disappeared. On those facts, the starting inference was that Jonathan and Derek absconded with the money unless they could displace that conclusion. Allan’s existence was therefore a material fact pleaded by the appellants to show that they did not misappropriate the funds.
Second, the Court reasoned that if the burden were on Lyu Yan, she would face the “unenviable” task of proving a negative—that Allan did not exist. The Court therefore applied the principle that “he who asserts must prove”, citing SCT Technologies Pte Ltd v Western Copper Co Ltd [2015] SGCA 71 at [17]. This approach is important because it frames the evidential expectations in fraud-related disputes: where a defendant offers a third-party explanation, the defendant must produce positive evidence rather than rely on bare assertions.
2. Failure to discharge the burden
The Court of Appeal found that Jonathan and Derek did not discharge their burden. Their case was limited to justifying why they lacked evidence. Even if those justifications were accepted, they could not substitute for positive evidence that Allan existed. The Court noted that Allan’s contact number could not be reached and that messages purportedly from Allan could have been sent by anyone. In the absence of corroboration, the appellants’ evidence amounted to a bare assertion, which was insufficient.
The Court also scrutinised the appellants’ explanations for why evidence was missing. Jonathan and Derek claimed they destroyed correspondence with Allan out of fear of prosecution by Chinese authorities. Yet they had shared WhatsApp screenshots with Joseph showing messages purportedly from Allan instructing them to transfer RMB7.1m. The Court found it implausible that they would share correspondence with Joseph if they were trying to cover their tracks, particularly after the Second Transaction had become problematic. The Court further observed that nothing was put before the Court to establish that deleted correspondence could not be recovered, and the appellants took no steps to attempt recovery. These gaps undermined their credibility.
They also claimed they were involved for commission and would not keep any of Lyu Yan’s money. The Court found this implausible because if they were acting for commission, one would expect them to retain some benefit. The appellants offered two explanations, both rejected as incredible. First, they suggested Derek would collect commission from Allan in cash in Singapore, which would defeat Allan’s purported need for secrecy. Second, they claimed they knew and trusted Allan through a person called “Lan Da Tong” and had worked with Allan in a similar transaction in 2017. However, they provided no evidence of their prior dealings in 2017 and offered nothing about Lan Da Tong that could support their narrative. The Court therefore concluded that Allan was fictitious.
3. Consequences for conspiracy and unjust enrichment
Having found Allan fictitious, the Court held that Lyu Yan’s claim in conspiracy succeeded. The appellants’ misrepresentations to Joseph—both those made during the transaction and those made after 16 October 2018 regarding Allan’s involvement—were intentional and were clearly known to the appellants and intended to be conveyed to Lyu Yan. The Court treated these lies, together with the receipt and onward transfer of Lyu Yan’s money, as amounting to fraud. This reasoning illustrates how conspiracy can be established where intermediaries coordinate deception to induce the claimant to part with money.
Similarly, the Court found unjust enrichment succeeded. The appellants argued that the basis for Lyu Yan’s transfer to them was that they would pass the money to Allan. Since Allan was non-existent, the basis failed. The appellants also attempted to rely on defences such as ministerial receipt and change of position. The Court rejected these because the appellants were lying to Lyu Yan and were not acting honestly or in good faith. This aligns with the broader public policy logic that unjust enrichment defences should not protect dishonest conduct.
4. Negligence claim: the Court’s reservations
The Court of Appeal expressed doubts about whether the High Court was correct to allow negligence alongside conspiracy and unjust enrichment. Negligence requires a failure to exercise due care. The Court reasoned that an intention to defraud is not readily reconcilable with negligence, which is typically concerned with carelessness rather than intentional wrongdoing. While the Court did not ultimately overturn the result, it emphasised that the claimant only needed to succeed on one cause of action, whereas the defendants needed to defend all three. This is a useful litigation point: defendants may face strategic disadvantage if multiple causes of action are pleaded and at least one is strongly supported by the evidence.
5. The Foster v Driscoll rule and the mental element
On the Foster v Driscoll issue, the Court of Appeal clarified the scope of the rule. It held that Foster v Driscoll applies only if the appellants can show that Lyu Yan intended, or at least knew, that the Second Transaction violated Chinese law. The Court found that the evidence did not establish that Lyu Yan knew the transaction was illegal under Chinese law.
The Court accepted that Lyu Yan knew she was prohibited from remitting money directly from China to overseas. However, she believed there was a legitimate workaround. Specifically, she thought that if she transferred money from her China bank account to another China bank account “Z”, and the person who owned account Z arranged for a corresponding transfer of foreign currency to her Singapore account, the arrangement would not violate the prohibition. The Court treated this as a genuine belief in legality, even though the structure still functioned as a remittance. The Court’s point was that the claimant’s belief went to the mental element required for Foster v Driscoll.
The Court also considered contemporaneous evidence. Lyu Yan requested fictitious loan documents to show her Singapore banks, so that the banks would think the remitted funds were loan repayments. At most, this showed possible knowledge of illegality under Singapore law, but it did not establish knowledge of illegality under Chinese law. The Court noted that the fictitious loan documents were never shown to Chinese authorities and that Lyu Yan asked for them because her Singapore bank manager instructed her to do so. The Court therefore concluded that Lyu Yan was entitled to assume her bank manager would not instruct her to break the law. This reasoning underscores that the Foster v Driscoll inquiry is not generic “illegality” but illegality under the relevant foreign law, coupled with the claimant’s knowledge or intent.
What Was the Outcome?
The Court of Appeal dismissed the appeal. It upheld the High Court’s findings that Allan was fictitious and that Lyu Yan’s claims in conspiracy and unjust enrichment were properly allowed against Jonathan and Derek. The Court also rejected the appellants’ reliance on Foster v Driscoll, holding that the mental element required to trigger the rule was not proven on the evidence.
Practically, the decision means that intermediaries who fabricate third-party explanations to conceal misappropriation cannot readily shift liability by invoking foreign illegality doctrines unless they can prove the claimant’s knowledge or intent to violate the relevant law. The appellants remained liable for the losses awarded at first instance.
Why Does This Case Matter?
1. Clarification of the evidential burden in “third-party” fraud defences
Ang Jian Sheng Jonathan is significant for its clear articulation of burden of proof where defendants claim that a third party absconded with the money. The Court’s reasoning shows that where the claimant’s money is received and then disappears, the defendant must produce positive evidence supporting the third-party narrative. Courts will not accept bare assertions, especially where the defendant’s explanations for missing evidence are implausible or inconsistent with earlier conduct.
2. Limits of Foster v Driscoll in Singapore
The case also provides useful guidance on how the Foster v Driscoll rule is engaged in Singapore. The Court emphasised that the rule requires proof that the claimant intended or knew that the transaction violated the relevant foreign law. This is a demanding threshold. It prevents defendants from using public policy illegality arguments as a substitute for evidence of the claimant’s mental state. For practitioners, this means that illegality defences must be pleaded and proved with careful attention to (i) the specific foreign law allegedly breached and (ii) the claimant’s knowledge or intent regarding that breach.
3. Interaction between intentional wrongdoing and negligence pleading
Although the Court did not decide the negligence issue definitively against the claimant, its reservations are instructive. Where the factual matrix is dominated by intentional deception, negligence may be conceptually strained. Lawyers should consider whether pleading negligence alongside intentional torts adds value or creates unnecessary complexity, particularly in cases involving illegality and public policy.
Legislation Referenced
- (None specified in the provided judgment extract.)
Cases Cited
- Foster v Driscoll [1929] 1 KB 470
- SCT Technologies Pte Ltd v Western Copper Co Ltd [2015] SGCA 71
- Lyu Yan v Lim Tien Chiang [2020] SGHC 145
- Ang Jian Sheng Jonathan and another v Lyu Yan [2021] SGCA 12
Source Documents
This article analyses [2021] SGCA 12 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.