Case Details
- Citation: [2021] SGCA 12
- Case Title: Ang Jian Sheng Jonathan & Anor v Lyu Yan @ Lu Yan
- Court: Court of Appeal of the Republic of Singapore
- Date of Decision: 23 February 2021
- Civil Appeal No: 128 of 2020
- Originating Proceeding: HC/Suit No 1109 of 2018
- Parties: Appellants: (1) Ang Jian Sheng Jonathan (2) Lim Zhengde; Respondent: Lyu Yan @ Lu Yan
- Roles in High Court Suit: Plaintiff: Lyu Yan @ Lu Yan; Defendants: (1) Lim Tien Chiang (2) Ang Jian Sheng Jonathan (3) Lim Zhengde
- Judges: Sundaresh Menon CJ, Andrew Phang Boon Leong JCA and Belinda Ang Saw Ean JAD
- Judgment Type: Ex tempore judgment
- Legal Areas: Contract; Tort (conspiracy, negligence); Unjust enrichment; Illegality/public policy (discussed via Foster v Driscoll)
- Judgment Length: 16 pages, 4,201 words
- Key Issues (as framed on appeal): (1) Whether “Allan” exists; (2) Whether the rule in Foster v Driscoll applies; (3) Whether Lyu Yan intended or knew the second transaction would violate Chinese law; (4) Scope of Foster v Driscoll
Summary
In Ang Jian Sheng Jonathan & Anor v Lyu Yan @ Lu Yan ([2021] SGCA 12), the Court of Appeal upheld the High Court’s findings that the appellants, Jonathan and Derek, were liable to a bank customer, Lyu Yan, after her funds were diverted during an attempted remittance. The case arose from two remittance arrangements facilitated through a BNP relationship manager and a set of intermediaries. The second transaction—where Jonathan and Derek were involved—ended with the money disappearing shortly after Lyu Yan transferred funds to accounts nominated by the intermediaries.
The appellants’ principal defence was that the money had been passed to a supposed third party, “Allan”, who then absconded. They also invoked the English Court of Appeal decision in Foster v Driscoll to argue that Lyu Yan’s non-contractual claims should be barred because the transaction was intended to violate Chinese law. The Court of Appeal rejected both arguments. It held that Allan was fictitious and that the appellants failed to discharge the burden of proving Allan’s existence. On the Foster v Driscoll point, the court emphasised that the rule only applies if the claimant intended, or at least knew, that the relevant transaction would violate the foreign law. The evidence did not establish that Lyu Yan had the requisite intention or knowledge.
What Were the Facts of This Case?
The respondent, 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 account. BNP’s relationship manager referred her to Joseph (the first defendant in the High Court) to assist with the remittance. This referral is important because it shows that Lyu Yan was not dealing with the appellants directly at the outset; rather, she relied on intermediaries to structure and execute the remittance.
In September 2018, Lyu Yan instructed Joseph to transfer the equivalent of US$3m in RMB from her Chinese bank account to her Singapore bank account with Credit Suisse (“the First 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 later received the equivalent amount in US dollars in her Singapore Credit Suisse account from a Hong Kong bank account. The First Transaction functioned as a “baseline” remittance structure, suggesting that Lyu Yan believed legitimate remittance pathways were available.
In October 2018, Lyu Yan engaged Joseph again for a second remittance (“the Second Transaction”). On 16 October 2018, she agreed to convert RMB21,075,000 to US$3m at an exchange rate of USD1 = RMB7.025, and to remit the US$ from her China Merchant Bank account to her Singapore BNP account (“the Agreement”). For this Second Transaction, Joseph enlisted the help of Jonathan and Derek (the appellants). The appellants’ involvement was operational: they were used to nominate accounts and facilitate the movement of funds in China.
Later that same day, Lyu Yan transferred money from her China bank accounts to various China bank accounts nominated by Joseph. Joseph, in turn, obtained those nominated accounts from Jonathan and Derek. Between 17 October 2018 and 18 October 2018, Jonathan and Derek transferred all the money away. The funds disappeared. Lyu Yan pursued Joseph for the money; Joseph pursued Jonathan and Derek. Derek eventually told Joseph that the counterparty was a person named “Allan”. Derek added Joseph to a WhatsApp group chat called “Fast Remittance” that included Derek, Allan and Jonathan. Allan purported to provide assurances that transfers would be made, but he stopped replying on 22 October 2018.
What Were the Key Legal Issues?
The appeal raised two main issues, each with sub-questions. First, the court had to determine whether “Allan” existed as a real person or whether the appellants’ narrative was a fabrication designed to shift blame. This issue was tightly linked to the burden of proof: Jonathan and Derek asserted that Allan was the true recipient and that Allan absconded, rather than the appellants misappropriating the funds.
Second, the appellants argued that the rule in Foster v Driscoll should bar Lyu Yan’s non-contractual claims (including tort and unjust enrichment). The Foster v Driscoll principle, as applied in Singapore, is concerned with illegality and public policy: where a claimant seeks to enforce rights arising from an illegal transaction, the court may refuse relief. However, the rule is not automatic. The court needed to consider the scope of the rule and, crucially, whether Lyu Yan intended or knew that the Second Transaction would violate Chinese law.
Accordingly, the legal issues on appeal were: (i) whether Allan exists (and whether the appellants discharged their burden); (ii) whether Foster v Driscoll applies on the facts; and (iii) whether the evidence established that Lyu Yan had the requisite intention or knowledge that her remittance structure would breach Chinese law.
How Did the Court Analyse the Issues?
1. Whether Allan exists and the burden of proof
The Court of Appeal began by identifying that the burden lay on Jonathan and Derek to prove that Allan exists. The court gave two reasons. First, the admitted facts showed that Lyu Yan gave the appellants her money and the money disappeared. On those facts alone, the starting point is that Jonathan and Derek absconded with the funds unless they can displace that conclusion. Allan’s existence was therefore necessary to show that the appellants did not misappropriate the money. In other words, Allan was not a peripheral detail; it was the material fact pleaded to establish their defence.
Second, the court reasoned that if the burden were on Lyu Yan, she would face the difficult task of proving a negative—that Allan does not exist. The court therefore treated the appellants’ assertion as something they must substantiate with positive evidence. It was not enough to explain why evidence was missing; the appellants needed to show Allan’s existence through credible proof.
The court found that the appellants did not discharge this burden. Allan’s contact number could not be reached, and messages attributed to Allan could have been sent by anyone. The court characterised the appellants’ case as amounting to a bare assertion rather than positive evidence. It also rejected the appellants’ explanations for the lack of evidence. They claimed they destroyed correspondence with Allan to avoid prosecution by Chinese authorities. Yet they had shared screenshots of WhatsApp messages purportedly from Allan with Joseph, even after the Second Transaction had become problematic. The court found it implausible that they would share such correspondence if their purpose was to cover their tracks.
The court further found the appellants’ explanations inconsistent with ordinary commercial behaviour. Jonathan and Derek claimed they were involved for commission, but they sent all the money away rather than retaining any portion. Their explanations for why they did not keep commission were also implausible: one explanation suggested Derek would collect commission in cash in Singapore, which would undermine Allan’s purported need for secrecy; another suggested they knew and trusted Allan from a prior transaction in 2017, but they provided no evidence of that prior dealing and did not explain the role of a person called “Lan Da Tong” who allegedly introduced them to Allan.
2. Conspiracy and unjust enrichment based on intentional deception
Once Allan was found to be fictitious, the court held that Lyu Yan’s claim in conspiracy succeeded. The appellants made various misrepresentations to Joseph, including representations made after 16 October 2018 about Allan’s involvement. The court found that the appellants clearly knew and/or intended that Joseph would convey those representations to Lyu Yan. Coupled with the receipt and subsequent transfer of Lyu Yan’s money elsewhere, this amounted to fraud in substance.
Similarly, the unjust enrichment claim succeeded. The appellants argued that the basis for Lyu Yan’s transfer was that they would pass the money to Allan. But if Allan did not exist, that basis failed. The court also rejected the appellants’ reliance on defences such as ministerial receipt and change of position. The court reasoned that these defences require honesty and good faith, and the appellants were lying to Lyu Yan. In effect, the court treated the appellants’ conduct as disentitling them to equitable relief.
3. Negligence and the limits of intentional wrongdoing
Although the High Court allowed negligence alongside conspiracy and unjust enrichment, the Court of Appeal expressed “some doubts” about whether negligence should have been allowed. The court’s reasoning was conceptual: negligence is fundamentally a failure to exercise due care, whereas the case involved intentional lies and fraud. The court suggested that an intention to defraud is not easily characterised as negligence, because negligence is not the same as an intention to actively inflict injury. The court did not definitively overturn the negligence finding, but it indicated that the overlap between intentional deception and negligence is problematic.
This discussion is practically significant. It signals that where the claimant’s case is founded on intentional wrongdoing, courts may scrutinise whether negligence is an appropriate cause of action, even if the claimant ultimately succeeds on other grounds. For litigators, it also highlights the importance of aligning pleaded causes of action with the underlying mental element and factual narrative.
4. The rule in Foster v Driscoll and the requirement of intention or knowledge
The Court of Appeal then addressed the illegality/public policy defence. The rule in Foster v Driscoll applies only if the appellants can show that the claimant intended, or at least knew, that the Second Transaction violated Chinese law. The court held that this threshold was not met. The evidence did not establish that Lyu Yan knew the Second Transaction violated Chinese law.
The court accepted that Lyu Yan knew she was prohibited from remitting money directly from her China bank accounts to her overseas bank accounts. However, she believed there was a legitimate “workaround” structure. Specifically, she thought that if she transferred money from her China bank account to another China bank account “Z”, it would not violate the prohibition provided that the person who owned account Z arranged a corresponding transfer of foreign currency to her bank account in another jurisdiction. The court treated this as a genuine belief about legality, even if the structure was ultimately fraudulent in execution.
In other words, the court distinguished between (i) knowledge that the transaction was prohibited in a direct form and (ii) knowledge that the particular remittance structure used would violate Chinese law. The Foster v Driscoll rule is concerned with the claimant’s culpability in relation to illegality. Without proof of intention or knowledge, the public policy bar could not be invoked to defeat Lyu Yan’s non-contractual claims.
What Was the Outcome?
The Court of Appeal dismissed the appeal. It affirmed that Allan was fictitious and that Lyu Yan’s claims in conspiracy and unjust enrichment were properly allowed. The court also indicated reservations about the negligence analysis but did not disturb the overall result in Lyu Yan’s favour.
Practically, the decision means that intermediaries who misappropriate funds and fabricate third-party narratives cannot rely on illegality defences under Foster v Driscoll unless they can prove the claimant’s intention or knowledge of illegality. The appellants remained liable to compensate Lyu Yan for the losses arising from the fraudulent diversion of her funds.
Why Does This Case Matter?
1. Burden of proof and the evidential standard for “third-party” defences
The case is a strong authority on how courts approach defences that depend on the existence of a purported third party. Where the claimant’s money was received and then disappeared, the defendant must do more than offer a narrative; the defendant must provide positive evidence. The Court of Appeal’s reasoning on burden allocation—especially the concern about proving a negative—will be useful in future disputes involving alleged intermediaries, phantom counterparties, and missing evidence.
2. Clarifying the scope of Foster v Driscoll in Singapore
The decision reinforces that Foster v Driscoll is not a blanket illegality bar. The claimant’s mental state is central. Defendants invoking public policy must establish that the claimant intended, or at least knew, that the transaction violated the relevant law. This is particularly relevant in cross-border remittance cases, where claimants may know of prohibitions but believe they are using a lawful structure.
3. Cause of action alignment: intentional fraud versus negligence
Although the court did not overturn negligence, its doubts provide guidance for pleading strategy and legal analysis. Where the factual matrix is dominated by intentional deception, courts may question whether negligence adds anything beyond conspiracy and unjust enrichment. For practitioners, this suggests careful consideration of whether negligence is genuinely available on the facts, or whether the claim should be framed primarily around intentional torts and restitutionary principles.
Legislation Referenced
- (Not provided in the supplied extract. The judgment excerpt focuses on common law principles, including the Foster v Driscoll rule, rather than specific statutory provisions.)
Cases Cited
- SCT Technologies Pte Ltd v Western Copper Co Ltd [2015] SGCA 71
- Lyu Yan v Lim Tien Chiang [2020] SGHC 145
- Foster v Driscoll [1929] 1 KB 470
- Ang Jian Sheng Jonathan & Anor v Lyu Yan @ Lu 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.