Failed investment in Michelin Bib Gourmand prawn noodle sours 30-year friendship

SINGAPORE - The owner of a well-known hawker stall selling prawn noodles in Zion Road decided to go into business with a childhood friend to open a restaurant in South Bridge Road, after turning down other investors.

But the restaurant, which specialised in prawn noodles, struggled to stay afloat and closed down on Oct 1, 2021, after operating for nine months.

The business failure soured the friendship of over 30 years between the hawker, Mr Teo Aik Hua, and his friend, Mr Don Tan, a former chief executive of mainboard-listed company Sin Heng Heavy Machinery.

Mr Tan ended up suing Mr Teo for the repayment of $350,000 that he claimed was a personal loan he had extended to the hawker.

In response, Mr Teo said the loan, which was disbursed in multiple transactions, was not made to him personally but to the company that was set up to run the restaurant.

In a written judgment published on Feb 14, a district judge said he dismissed the lawsuit because Mr Tan failed to produce a single shred of evidence to show that the loans were made to Mr Teo.

District judge Vince Gui noted that as a former CEO of a listed company, Mr Tan ought to have known the significance of not documenting a loan allegedly made to another individual.

The judge also detailed key pieces of evidence that did not square with Mr Tan's claim.

This included the fact that Mr Tan had transferred the funds directly to the company's bank account and had indicated "director loan" in the remarks for at least one transfer.

Judge Gui also noted that Mr Tan referred to the money in an e-mail as a "shareholder's loan" contributed by him.

This solidified the understanding that Mr Tan had loaned the sum to the company, said the judge.

Mr Teo, who does not speak English, became a hawker when he was 16 years old.

He sold his signature prawn noodles at the Zion Riverside Food Centre. The stall, named Fresh Taste Big Prawn Noodle, has received the Michelin Bib Gourmand every year since 2018, except in 2020 when no selection took place due to the Covid-19 pandemic. Michelin's Bib Gourmand award is given to places that offer good value meals.

In June 2020, Mr Teo decided to go into the restaurant business. Around this time, he received news that the food centre would undergo renovations from November 2020 to April 2021.

Mr Tan, who regularly patronised his stall, agreed to be his business partner.

On Nov 30, 2020, a company, 2 Bowls, was incorporated to run the restaurant, named Zhi Wei Xian @ Zion Road Big Prawn Noodle.

Mr Tan held a 50 per cent stake in the company while Mr Teo held 30 per cent of the shares and Mr Teo's fiancee, Ms Lisa Lin, held the remaining 20 per cent.

They agreed that Mr Tan would provide loans to fund the venture. He would recover his loans from the company's profits, with any excess profits to be split according to each person's shareholding.

The restaurant opened in January 2021, with Mr Teo and Ms Lin handling the day-to-day operations. Mr Tan disbursed an initial loan of $250,000.

In 2021, various dining restrictions that were implemented to curb the spread of Covid-19 affected the restaurant's operations.

Mr Tan made a further loan of $50,000 after Ms Lin told him that the company's funds were running low.

The business remained unprofitable, and Mr Tan decided to inject a further $50,000.

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On Sept 28, 2021, all three shareholders agreed to close the restaurant. Ms Lin and Mr Tan then exchanged e-mails over the closing of the company and the accounts.

When Mr Tan asked how the $350,000 would be repaid to him, Ms Lin reminded him that the loans were made to the company.

In April 2022, Mr Tan withdrew $36,500 from the company's bank account, leaving a balance of $43.39.

Judge Gui said what likely happened was that Mr Tan had invested in the company "with buoyant spirits", confident that the restaurant would attract the same following that Mr Teo's hawker stall did, but his predictions did not come true.

Unable to recover his losses from what remained in the company's bank account, Mr Tan turned to Mr Teo and Ms Lin for repayment, and when they refused to comply, he changed tack to claim that the sum was a personal loan, said the judge.

This article was first published in The Straits Times. Permission required for reproduction.