Beyonics Asia Pacific Ltd and others v Goh Chan Peng and another and another appeal

• Jurisdiction: Singapore
• Judge: Andrew Phang Boon Leong JCA
• Judgment Date: 02 June 2021
• Neutral Citation: [2021] SGCA(I) 2
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeal Nos 100 and 185 of 2020
• Published date: 05 June 2021
• Year: 2021
• Hearing Date: 02 February 2021
• Plaintiff Counsel: Chin Li Yuen Marina, Alcina Lynn Chew Aiping, Siew Guo Wei, Darren Ng Zhen Qiang, Germaine Teo and Joseph Lim (Tan Kok Quan Partnership)
• Defendant Counsel: Davinder Singh s/o Amar Singh SC, Lin Xianyang Timothy, Tan Mao Lin, Gerald Paul Seah Yong Sing and Joshua Chia Sheng Rong (Davinder Singh Chambers LLC)
• Subject Matter: Abuse of Process,Henderson v Henderson doctrine,Companies,Directors,Duties
• Citation: [2021] SGCA(I) 2

Judith Prakash JCA (delivering the judgment of the court): Introduction

These are two related appeals filed by the same appellants against the same respondents. CA/CA 100/2020 (“CA 100”) is an appeal against the decision of the International Judge (“the Judge”) in Beyonics Asia Pacific Ltd and others v Goh Chan Peng and another [2020] 4 SLR 215 (“the Judgment”), in which the Judge struck out the appellants’ claims in SIC/S 10/2018 (“S 10”) for being in abuse of process. The Judge also held that most of the claims would have failed on the merits in any event. CA/CA 185/2020 (“CA 185”) is an appeal against the Judge’s decision on costs.

These appeals arise out of extended and rather unusual proceedings involving two actions in the High Court (“HC”) and the Singapore International Commercial Court (“SICC”). The background to the appeals and the conduct of the parties in the prior proceedings are crucial to the determination of whether S 10 had been brought in abuse of process. For the reasons set out below, we hold that there was no abuse of process pursuant to the extended doctrine of res judicata laid down by the English decision in Henderson v Henderson (1843) 3 Hare 100 (“the Henderson doctrine”). Following from our decision that the claims should not have been struck out, we consider the Judge’s decision on the merits of S 10.

Facts

We first set out the brief factual background that is necessary to the determination of whether S 10 had been brought in abuse of process. We will detail the factual disputes further when considering the substantive merits of the appellants’ claims.

The parties

At the material time, Beyonics Technology Ltd (“BTL”) was the parent company of the Beyonics Group (“Beyonics”). The appellants were wholly owned subsidiaries of BTL and are: Beyonics Asia Pacific Limited (“BAP”); Beyonics International Limited (“BIL”); Beyonics Technology (Senai) Sdn. Bhd. (“BTS”); Beyonics Technology Electronic (Changshu) Co., Ltd (“BTEC”); and Beyonics Precision (Malaysia) Sdn. Bhd. (“BPM”).

Beyonics is engaged in, inter alia, manufacturing baseplates and other precision machining parts for the hard disk drive (“HDD”), electronics and automotive industries. The Precision Engineering Services Division (“PES Division”) of Beyonics manufactured and supplied baseplates for HDDs manufactured by Seagate Technology International (“Seagate HDDs”), including under what was known as the Brinks 2H programme. BAP, BTEC and BPM, as well as another subsidiary, Beyonics Technology (Thailand) Co Ltd (“BTT”), were part of the PES Division. Mr Lee Leong Hua (“Mr LH Lee”) was the Senior General Manager of BTEC’s baseplate manufacturing facility.

The first respondent, Mr Goh Chan Peng (“Mr Goh”), is the beneficial owner of the second respondent, Pacific Globe Enterprises Limited (formerly known as Wyser International Limited) (“Wyser”). At the time when the transactions referred to in this appeal took place, Mr Goh was the Chief Executive Officer (“CEO”) and sole executive director of BTL as well as a director of companies in Beyonics. He had been the CEO since the year 2000 and was used to operating very independently in his running of Beyonics.

On or about 2 February 2012, Channelview Investments Ltd (“Channelview”) acquired the entire issued share capital of BTL including Mr Goh’s small shareholding. In exchange, Mr Goh received shares in Channelview (4.89% of its issued capital) and retained his management positions in BTL and its subsidiaries. Mr Kyle Arnold Shaw Junior (“Mr Shaw”) became the chairman of Channelview as well as non-executive chairman of BTL.

Background to the dispute

Nedec Co Ltd (“NEDEC”) and Kodec Co Ltd (“KODEC”) are affiliated companies incorporated in Korea. NEDEC, KODEC and other affiliated companies are collectively referred to as “NEDEC/KODEC”. A Chinese company, Langfang Nedec Machinery & Electronics Co Ltd (“LND”) is part of the NEDEC/KODEC group. LND has a baseplate manufacturing facility located in China. At the material time, Mr Stephen Hwang (“Mr Hwang”) was the CEO of NEDEC/KODEC and Mr Tae Sung Lee (“Mr Tony Lee”) was their Chief Financial Officer.

The process of manufacturing of baseplates can be divided into two main stages. “First Stage Work” involves processes such as die-casting and ends with e-coating. “Second Stage Work” involves precision machining and other work to produce a finished baseplate. At the second stage, Special Purpose Machines and/or Computer Numerical Control Machines (“CNC Machines”) are used to drill holes and cut the baseplates.

Completed baseplates are sent to a company which assembles the other components of the HDD in a process called the motor baseplate assembly. Nidec Corporation (“Nidec”) is one such company doing assembly work. Nidec also had a baseplate manufacturing factory, Nidec Brilliant.

In order to become manufacturers of Seagate HDDs, the manufacturing plants have to undergo a qualification process. BTEC, BPM and BTT were qualified as plants to manufacture baseplates for Seagate HDDS. Prior to the floods (see [13] below), the manufacture of baseplates within Beyonics was divided amongst BTEC, BPM and BTT. In 2011, NEDEC/KODEC was not yet qualified as a supplier to Seagate.

Within Beyonics, when baseplates were shipped from the relevant qualified plant to the assembly company, BTEC, BPM or BTT would issue an invoice to BAP for the number of baseplates shipped. BAP would then invoice Seagate for these baseplates.

As a result of severe floods in Thailand in October 2011, Seagate suffered a loss of supply of some 24.1 million baseplates. BTT’s baseplate manufacturing facility was also damaged beyond repair. Seagate therefore embarked upon a recovery plan to replace the supply of baseplates with a view to recovering Seagate’s HDD market. The disputes in this appeal and the proceedings below pertain to what transpired between Mr Goh and NEDEC/KODEC following the floods and the impact of these interactions on the appellants.

Following the floods, BAP and NEDEC/KODEC entered into a collaboration known as the BN Alliance (the “BN Alliance”) in late 2011 in relation to the manufacturing of Seagate baseplates for the Brinks 2H programme. Under the BN Alliance, BTEC completed the First Stage Work and shipped the e-coated baseplates to LND. LND then performed the Second Stage Work before selling the baseplates to Seagate. Whether entering into the BN Alliance was in the interests of the appellants was a key issue in dispute. Beyonics eventually lost Seagate as a customer, and the last shipment of baseplates from Beyonics to Seagate took place in August 2013.

On 9 January 2013, Mr Goh resigned from his directorships in various companies in Beyonics. In this regard he signed resignation agreements with some of these companies, including BAP, BIL and BTS.

The Wyser Agreements

Three Wyser Agreements were entered into between Mr Goh on behalf of Wyser and Mr Tony Lee on behalf of NEDEC/KODEC (collectively, the “Wyser Agreements”). The First Wyser Agreement was between Wyser and KODEC. It provided that Wyser would assist KODEC in “securing quarterly 6 million baseplates capacity business starting from April 2012 for the Seagate Brink 2H program for an approximately US$45.6 million sales per year supplying at least 1 million pieces of e-coated baseplates to Kodec” and in “securing US$2.5 million as the co-sharing grant of fixture and tooling cost funded by Seagate”. It was further agreed that KODEC would pay Wyser a monthly sales and management support fee of US$0.02 for every Brinks 2H baseplate that was shipped to KODEC from February 2012 to March 2013.

The Second Wyser Agreement was between Wyser and NEDEC. It contained the same terms as the First Wyser Agreement and provided in addition that NEDEC would pay US$500,000 to Mr Goh (by transfer to Wyser) upon its receipt of the US$2.5 million grant from Seagate.

The Third Wyser Agreement was between Wyser and KODEC. It provided that KODEC would carry out the Second Wyser Agreement and that Wyser would agree to transfer US$300,000 to Mr Stephen Hwang upon Wyser’s receipt of the US$500,000.

Mr Goh did not deny entering into the Wyser Agreements. The Wyser Agreements were characterised by the appellants as bribes and by the respondents as legitimate consultancy agreements.

Procedural history S 672/2013 Claims in S 672/2013

The first action to be taken as a result of the events above was S 672/2013 (“S 672”) filed in the HC, with BTL and Beyonics International Pte Ltd (“BIPL”) as the plaintiffs (the “672 Plaintiffs”); and Mr Goh, his wife, Ms Lee Bee Lan, Wyser and Wyser Capital Limited as the defendants (the “672 Defendants”). The substantive case was brought against Mr Goh and Wyser.

Firstly, BTL claimed that Mr Goh had breached his duty to exercise due care and skill, his duty of loyalty and fidelity, and/or his fiduciary obligations to the plaintiffs by (i) effecting a diversion of business in relation to Second Stage Work away from Beyonics to NEDEC/KODEC; (ii) procuring a US$2.5 million grant from Seagate for NEDEC/KODEC; (iii) facilitating NEDEC/KODEC in securing business from Seagate in competition with Beyonics with a view to NEDEC/KODEC supplanting Beyonics as a manufacturer of Seagate HDDs; and (iv) receiving payments under the Wyser Agreements.

Secondly, BTL claimed that Mr Goh and Wyser had engaged in an unlawful means conspiracy with NEDEC/KODEC and its representatives to injure BTL. Thirdly, BTL claimed that Wyser had dishonestly assisted Mr Goh’s breaches of fiduciary duties and/or had knowingly received payments under the Wyser Agreements.

Fourthly, BIPL claimed that Mr Goh, in breach of his duties, had caused or instructed staff members of BIPL to make various unjustified expense claims against its account, and procured an agreement for the payment of his monthly salary for the period from 10...