Thomas & Betts (S E Asia) Pte Ltd v Ou Tin Joon and Another

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu J
• Judgment Date: 27 February 1998
• Neutral Citation: [1998] SGHC 57
• Court: High Court (Singapore)
• Year: 1998
• Published date: 21 February 2013
• Plaintiff Counsel: Bonnie Lo (Drew & Napier)
• Defendant Counsel: Daniel Lim (Shook Lin & Bok)
• Citation: [1998] SGHC 57

Judgment:

GROUNDS OF DECISION

The Background

1. The plaintiffs are the sole and exclusive distributors of a brand of product called 'PTR terminal blocks' in Asia by virtue of an exclusive distributorship agreement made between their parent company in the USA and PTR Messtechnik GMBH & Co, a German company.

2. The first defendant (Ou) used to be the managing director of the plaintiffs. He tendered his resignation on or about 14 July 1995 and left on 7 August 1995. He incorporated the second defendants (Phoenix) on or about 25 August 1995 and became their managing director and one of the shareholders some time also inAugust 1995.

3. On 6 March 1997, a writ of summons with the indorsed statement of claim was served by the plaintiffs on the defendants. The defence was filed on 2 April 1997.

4. Essentially, the plaintiffs claimed that Ou had disclosed to Phoenix confidential information (i.e. customers' identities) belonging to the plaintiffs for the benefit of himself or Phoenix, to the detriment of the plaintiffs.

5. In so doing, Ou acted in breach of his employment contract with the plaintiffs, failed to exercise his duty of good faith and fidelity whilst in the plaintiffs' employ and breached his statutory or fiduciary duties under ss 157(1) and 157(2) of the Companies Act (Cap 50).

6. As against Phoenix, the claim was that the company had wrongfully induced and procured the plaintiffs' customers to breach their obligations with the plaintiffs in respect of the PTR terminal blocks, despite knowledge of the plaintiffs' rights as sole distributors.

7. Subsequently, on 16 September 1997, the plaintiffs furnished further and better particulars of the alleged breaches as claimed in the statement of claim.

8. On 22 October 1997, the parties appeared before me on the defendants' application (summons in chambers no. 6326 of 1997) to strike out the statement of claim. At the conclusion of the hearing, I made the following orders:

(a) There be an order-in-terms of the defendants' application in that the plaintiffs' allegations relating to implied duties and statutory fiduciary duties as set out in paras 10, 11, part of para 14 (relating to para 10) and para 16 of the statement of claim filed on 6 March 1997 are struck out.

(b) Plaintiffs to file an amended statement of claim to confine breach by the first defendant to the express covenant, that is, clause 5 of his employment contract or to render further and better particulars of the breach of that express covenant by 5 November 1997 with liberty to the defendants to file an amended defence within 14 days of service of the amended statement of claim.

(c) The orders made to be without prejudice to the defendants' making an application under O 14 r 12 of the Rules of the Supreme Court (RSC) for the court's determination on a question of law, as to whether the plaintiffs can succeed in their claim against the first defendant on breach of express covenant.

(d) Costs of the application to the defendants to be taxed at 60% of full costs but with full disbursements, unless otherwise agreed.

9. The plaintiffs are dissatisfied with my orders and have appealed (Civil Appeal No 239 of 1997) against that part of my decision striking out paras 10 and 11, part of para 14 (relating to para 10) and para 16 of the statement of claim, and that the plaintiffs bear 60% of the defendants' taxed costs and full disbursements.

The decision

10. For present purposes, I need only concern myself with those aspects of the case which are under appeal: (1) the alleged breaches of the implied term by Ou, whilst in the plaintiffs' employ, to exercise a duty of good faith and fidelity to the plaintiffs (the implied term) and (2) the alleged breaches of statutory or fiduciary duties under s 157 of the Companies Act by Ou whilst in the plaintiffs' employ.

11. I should begin by referring to the relevant portions of the statement of claim:

10. Further, it was an implied term of the Employment Contract that the first Defendant would at all times, whilst in the Plaintiffs' employ, exercise a duty of good faith and fidelity to the plaintiffs.

11. Further or in the alternative, the first Defendant owed, inter alia, the following fiduciary duties under the general law and/or pursuant to section 157(1) and 157(2) of the Companies Act (Cap 50): -

(1) a duty to act bona fide and honestly in the Plaintiffs' interest; and

(2) a duty not to make improper use of any information acquired by him as an officer or agent of the Plaintiffs to gain directly or indirectly, an advantage for himself or for any other persons or to cause detriment to the Plaintiffs.

14. In breach of clause 5 of the Employment Contract and the implied term referred to in paragraph 10 above, the first Defendant disclosed information belonging to the Plaintiffs of a confidential nature by divulging the identities of the Customers to the second Defendants. Further and/or in the alternative, the first Defendant made use of such confidential information for his own benefit and/or benefit of the second Defendants to the detriment of the Plaintiffs.

16. Further or in the alternative, by reason of the matters stated above, the first Defendant acted in breach of his fiduciary duties to the Plaintiffs referred to in paragraph 11 above.

(a) Implied term to exercise a duty of good faith and fidelity ('the implied term')

12. The allegation that there was a breach of the implied term is found in para 10 of the statement of claim. The key words in that para are 'whilst in the Plaintiffs'...