When two brothers sued each other over $3m of family expenses

Nothing tests family bonds quite like large sums of money, as two warring brothers in Singapore found out when they sued each other over more than $3 million in expenses for a family home, special car number plates and fine wines.

The amount in dispute was substantial because it involved two real estate tycoons who were fighting over payments that were made before they fell out. The showdown was ignited when the younger brother filed a lawsuit against his elder brother to get back $2.8 million he claimed was a loan.

But the elder brother said he did not borrow any money, contending that the payment was a “gift” from his younger brother to help with the construction of his $10 million house where their parents and sisters also lived.

The younger brother also claimed that his elder brother did not return $33,000 that was his share of the cost of fine wines they had ordered.

The elder brother responded in kind, filing a claim for $300,000 that he said was owed after he transferred two of his car registration plates featuring only the single digit “1” to his younger brother.

As the brothers’ money came from their family company in the form of dividends, one of their sisters, who is the firm’s chief financial officer, was also caught in the crossfire and had to testify in court.

But the brothers’ effort to recover their money came to nothing as all their lawsuits were dismissed by the High Court because their claims were supported mostly by mere words without any convincing evidence.

This case provides a compelling lesson on why it is better for families to resolve their disputes without going to court because it is often futile to prove transactions without records.

It is common for family members to run their businesses informally and it is only human that most do not keep records as few would anticipate court battles when everything is going well.

That said, if you feel the need to record certain transactions because the sums involved are substantial, it is wise to note any payments in writing so that you don’t have to rely on mere words if things go wrong.

For instance, sending an e-mail to the recipient to state the purpose of a payment is better than having no records at all, and even better if the other party replies and confirms the transaction.

Here are three observations from the case on why it is tough to prove informal transactions between family members.

Loan or gift

As the family was involved in the real estate business, it was natural that they would build their own homes too.

The elder brother’s house was built at a cost of over $10 million, as it was intended to be the family residence for their parents and two sisters too.

The younger brother’s house was more modest, costing just $1.4 million to build.

The family company could run into a deficit if the two homes were built for “free”, so the brothers were given invoices for their homes that would be paid with funds from their accounts.

The brothers could pay such expenses because they receive regular million-dollar dividends from the firm.

Sometime in 2015, the younger brother made a $2.8 million payment on an invoice for the main family home because he said his elder brother had asked for a loan so he could settle other expenses.

But the elder brother denied it was a loan, claiming instead that the payment was a contribution to the family home.

High Court Judge Alex Wong noted that the two brothers were on good terms at the time, and there were many occasions when they bought expensive gifts for each other and their families.

Indeed, in 2017, the younger brother even cancelled his family’s holiday in order to accompany his brother who was going to Germany for treatment to remove a tumour. He “sincerely wanted to show” his support as they were brothers, when it was all said and done, and co-owners of their family business.

“I am not persuaded that the relationship between the parties was so bad as to preclude the possibility of a transfer of moneys between the parties without a promise of repayment,” Judge Wong noted.

There were also “unanswered questions” on whether the animosity extended to their parents and sisters as all of them also benefited from living in the house.

But the judge did not have to rule on the motive for the payment because the younger brother could not show enough proof to support his case that it was a loan.

Other than his claim, he did not send any text messages to his elder brother about the funds, and their company’s ledger also did not have any record of the loan. So the court dismissed the claim for the $2.8 million loan.

Who paid for the wines

The younger brother also wanted to get back $33,000 used to pay for his brother’s wines. But the elder brother claimed that the money was actually payment for wines he had bought for his younger brother.

The court found that e-mails and invoices that were produced by the elder brother supported his case that the money was used to pay for a particular wine shipment that had been requested by the younger brother.

There was also an e-mail exchange between the brothers about their combined order of over 100 bottles. The elder brother said he would place the order and his younger sibling replied: “Ok pls add some for me but let me pay for it thank u.”

Judge Wong dismissed the $33,000 claim because the elder brother did not owe any money for the wine purchase.

Who paid for the car number plates

The family’s business records showed that they had spent over $3 million on cars bought with company funds.

The elder brother said the family treated the cars as shared assets, and they “never counted money with each other”. So they never made clear distinctions about who owned which car or whether they belonged to the family itself or to their company.

Such informal arrangements meant the elder brother had a tall order to prove that his younger sibling owed him $300,000 for transferring two vanity number plates that were each bought with a $150,000 bid.

The elder brother claimed that a phone message that his brother sent to their sister – “pls confirm with this clown that the cars accounts have been adjusted and reversed to my account” – showed there was such a debt.

But Judge Wong disagreed, as the message appeared to be a request, asking their sister to confirm with the elder brother that the company ledger had been adjusted to charge car-related costs to the younger brother’s account.

She did not ask for a clarification of the message because the younger brother was sending “a lot of abusive messages” then.

So the court dismissed the elder brother’s claim as the message did not amount to an admission that there was a $300,000 debt relating to the car plates. Even if there was a debt, the younger brother had stated in the message that this had been paid with the adjustments to his account.

This case should remind families that if they have not counted money with each other during their good times, they should continue to do so in bad times because it is often more fruitful to seek an amicable resolution than to go to court.

Tan Ooi Boon is the Invest Editor of The Straits Times.

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.

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