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Gui Chien Cheong Martin v. Facilit8te Pte Ltd and Another [2021] SGHC 105

INTRODUCTION

In the recent decision of Singapore High Court wherein the court had categorically dismissed Plaintiff’s claims against 2^nd defendants (“Our Client”), further no order as to costs were made as the court had to deliberate on appropriate costs order as 2^nd defendants conduct was found to unfairly prejudicial even though the Plaintiff’s claim was unsuccessful.

BACKGROUND FACTS

In this case, the Gui Chien Cheong Martin (“Plaintiff”) invested $203,799 in Facilit8te Pte Ltd (“First Defendant” hereinafter referred as F8), a company that offered home services organized and managed by vetted third-party vendors. The investment was made under a subscription agreement, and the plaintiff was to receive 5% equity in F8 after the conversion of director and shareholder loans into equity. The second defendant (“Our Client”), a co-founder and major shareholder of F8, agreed to this conversion.

The primary issue was the conversion of a $50,000 personal loan by the second defendant to F8 into equity. The second defendant initially denied the conversion but later, during trial, company witnesses confirmed that the loan had indeed been converted.

Despite the conversion, the second defendant still owed $50,000 to First Media, which he used F8’s funds to pay off. F8 paid $13,000 to First Media in part-payment of the second defendant’s loan without the plaintiff’s knowledge. Additionally, the second defendant increased his and another co-founder’s salaries to help repay the loan, resulting in a total increase of $35,000.

The business of F8 did not succeed, and in August 2018, the plaintiff requested to inspect the company’s accounts. It was revealed that the increased salaries were to be considered a loan to the second defendant, and he promised to repay it. However, there is a dispute over how much of this loan was repaid. The plaintiff contends that the second defendant only repaid $13,000 of the $35,000. The second defendant argued that it could not be proven whether he repaid the remaining $22,000

F8 eventually ceased operations by the end of 2018 due to financial difficulties. The exact reasons for the business failure were not fully established, and it was assumed to be related to a lack of market demand rather than mismanagement.

Read Full Case Summary: Gui Chien Cheong Martin v. Facilit8te Pte Ltd and Another [2021] SGHC 105