Beyonics Technology Ltd and another v Goh Chan Peng and others

• Jurisdiction: Singapore
• Judge: Hoo Sheau Peng JC
• Judgment Date: 28 June 2016
• Neutral Citation: [2016] SGHC 120
• Plaintiff Counsel: Marina Chin, Cheryl Nah, Alcina Chew, Eugene Low and Kristy Teo (Tan Kok Quan Partnership)
• Docket Number: Suit No 672 of 2013
• Date: 28 June 2016
• Hearing Date: 17 September 2015,09 September 2015,11 November 2015,10 September 2015,20 August 2015,14 September 2015,08 September 2015,26 August 2015,15 September 2015,09 November 2015,23 December 2015,04 September 2015,01 September 2015,03 September 2015,16 September 2015,27 August 2015,02 September 2015,25 August 2015,21 August 2015,18 August 2015,19 August 2015,28 August 2015
• Subject Matter: Equitable compensation,Fiduciary relationships,Causation,Conspiracy,Remedies,Accessory liability,Equity,Tort,Trusts,Duties
• Year: 2016
• Citation: [2016] SGHC 120
• Defendant Counsel: Ng Lip Chih (NLC Law Asia LLP)
• Court: High Court (Singapore)
• Published date: 01 July 2017

Hoo Sheau Peng JC: Introduction

The first defendant, Mr Goh Chan Peng (“Mr Goh”), was a former director and chief executive officer (“CEO”) of the plaintiffs (“the Plaintiffs”). The Plaintiffs allege that Mr Goh had breached various duties owed to them and further engaged in a conspiracy with the third defendant, Wyser International Limited (“Wyser International”), and a competitor to injure the Plaintiffs. Mr Goh’s wrongdoing purportedly resulted in the diversion of certain business with a customer to the competitor and culminated in the loss of the entire business with the customer. For the role Mr Goh played, he allegedly received two payments from the competitor via Wyser International, which dishonestly assisted in Mr Goh’s breach of duties. The First Plaintiff’s claims relate to the loss of the customer’s business (in part and in whole) and the two payments made. Separately, the Second Plaintiff claims against Mr Goh for unjustified expenses and salary.

In response, the defendants (“the Defendants”) deny that Mr Goh was in breach of duties and maintain that he acted in the best interests of the Plaintiffs at all times. While Mr Goh does not deny that he received payments from the competitor, he claims that they were for consultancy services provided to the competitor. Further, there was no conspiracy between Mr Goh, Wyser International and others to injure the Plaintiffs. Wyser International did not dishonestly assist in the breach of his duties. The loss of the customer’s business, in whole or in part, was not caused by them. Finally, the expenses and salary were justified.

The trial dealt with both liability and quantum. It was heard over 19 days in August and September 2015, with written submissions filed in November and December 2015. I now deliver my judgment.

Background Facts Parties, entities and persons

To begin, I set out the background facts of this case. The first plaintiff, Beyonics Technology Ltd (“the First Plaintiff”), is a company incorporated in Singapore on 9 November 1994. It was listed on the Singapore Stock Exchange on 30 August 1995. In February 2012, Channelview Investments Ltd (“Channelview”), a company incorporated in the British Virgin Islands, completed its acquisition of the First Plaintiff and became its sole shareholder. The First Plaintiff was delisted on 15 February 2012.

The First Plaintiff has wholly owned subsidiaries in many countries. The second plaintiff, Beyonics International Pte Ltd (“the Second Plaintiff”), is one such subsidiary. Collectively, the First Plaintiff and its subsidiaries shall be referred to as the “Beyonics Group”. The Beyonics Group is engaged in a variety of businesses. In particular, its precision engineering division (“PE Division”) manufactures (inter alia) baseplates, which are key components of hard disk drives (“HDDs”). The PE Division comprises the following subsidiaries: Beyonics Precision Engineering Pte Ltd, which is incorporated in Singapore; Beyonics Precision Machining Sdn Bhd (“BPM”), which is incorporated in Malaysia, and runs a plant in Tampoi, Johor Bahru, Malaysia; Wealth Preview Sdn Bhd (“Wealth Preview”), which is incorporated in Malaysia; Beyonics Technology (Thailand) Co Ltd (“BTT”), which is incorporated in and ran a plant in Thailand; Beyonics Technology Electronic (Changshu) Co Ltd (“BTEC”) which is incorporated in China and runs a plant in Changshu, Suzhou, China; and Beyonics Asia Pacific Limited (“BAP”), which is incorporated in Mauritius.

While there are four defendants in this suit, substantively, the action is against Mr Goh and Wyser International. From 1 May 2000, Mr Goh was the director and CEO of the Plaintiffs, as well as the CEO of the Beyonics Group. He resigned on 9 January 2013. Wyser International and the fourth defendant, Wyser Capital Limited (“Wyser Capital”), are companies incorporated in the British Virgin Islands. The companies are beneficially owned and controlled by Mr Goh. There is no substantive case against Wyser Capital. Nor is there any substantive claim against the second defendant, Mdm Lee Bee Lan (“Mdm Lee”), who is Mr Goh’s wife. They were sued mainly for the purpose of a Mareva injunction application filed earlier by the Plaintiffs. I shall make no further mention of Mdm Lee and Wyser Capital in the judgment.

It is also necessary to introduce the “competitor” of the Beyonics Group mentioned in [1]. Nedec Co Ltd (“NEDEC”) and Kodec Co Ltd (“KODEC”) are both companies incorporated in South Korea. Together with other associated companies, they shall be referred to as the “NEDEC/KODEC Group”. The NEDEC/KODEC Group is also involved in the precision engineering business, including the manufacturing of baseplates for HDDs. In particular, one of its entities, Langfang NEDEC Machinery & Electronics Co Ltd (“LND”), has a baseplate manufacturing facility located in Hebei, China. Mr Tae Sung Lee (“Mr Tony Lee”) is the chief financial officer (“CFO”) and managing director of the NEDEC/KODEC Group, while Mr Hwang Sejoon (“Mr Stephen Hwang”) is the CEO of the same.

The “customer” of the Beyonics Group described in [1] is Seagate Technology International (“Seagate”), one of the largest manufacturers of HDDs, and a key customer that purchased baseplates from the PE Division of the Beyonics Group. Mr Billy Chua is the Senior Manager of the Asia Commodity Management Team at Seagate. He was the main point of contact with the Beyonics Group and the NEDEC/KODEC Group at the relevant time.

Key events Manufacturing of baseplates for Seagate

I now set out the key events relevant to the present suit. From about 1987, Seagate began purchasing baseplates from the Beyonics Group. When Channelview was in the process of acquiring the First Plaintiff in early October 2011, Seagate remained an important customer of the First Plaintiff.

At this juncture, I briefly explain the process of manufacturing baseplates for Seagate. Broadly speaking, this can be divided into two main stages: the “First Stage Work” and the “Second Stage Work”. The First Stage Work involves processes such as die-casting, and ends with e-coating so as to produce “e-coated baseplates”. The Second Stage Work involves, among other things, precision machining and other works on the e-coated baseplates leading to the production of the “finished baseplates” supplied to Seagate.

Seagate baseplates are produced under various programmes, each having its own specifications. To be able to supply baseplates to Seagate for a particular programme, a supplier must undergo a qualification process. Over the years, the Beyonics Group has achieved qualification to perform both the First and Second Stage Work for numerous Seagate baseplate programmes, and supplied finished baseplates to Seagate. A programme known as “Brinks 2H” is the programme at the centre of the case.

Floods in Thailand and the aftermath

In October 2011, a major disruption to the global HDD business occurred. Severe floods in Thailand caused serious destruction to the facilities of many HDD manufacturers and component suppliers. BTT’s factory, the Beyonics Group’s baseplate manufacturing facility in Thailand (see [5(d)]), was not spared and had to be shut down.

After the disaster, Seagate was anxious to secure capacity from the HDD component suppliers to supply baseplates for its HDDs. It reached out to its suppliers to assist. What transpired among Seagate, the Beyonics Group and the NEDEC/KODEC Group in the aftermath of the Thailand floods is heavily disputed, especially in relation to Mr Goh’s role from October 2011 to 24 November 2011. I shall return to these disputes in due course.

The B–N Alliance

On 24 November 2011, at a meeting between Mr Billy Chua, Mr Tony Lee and Mr Goh, Seagate approved of a new collaboration between the Beyonics Group and the NEDEC/KODEC Group. This collaboration shall be referred to as the “B–N Alliance”.

On 10 January 2012, the B–N Alliance was encapsulated in an agreement between BAP, a subsidiary of the Beyonics Group (see [5(f)]), and LND, a subsidiary of the NEDEC/KODEC Group (see [7]) (“the BAP–LND Contract”). In relation to the manufacture of Seagate baseplates for the Brinks 2H programme, it was agreed that BTEC, the Beyonics Group’s plant in Changshu, China (see [5(e)]), would complete the First Stage Work to produce e-coated baseplates for supply to LND. LND would then perform the Second Stage Work, produce the finished baseplates and sell them to Seagate. From January 2012 to January 2013, the Beyonics Group duly supplied e-coated baseplates to the NEDEC/KODEC Group.

The Wyser Agreements

From 24 November 2011, there were negotiations concerning agreements to be entered into between the NEDEC/KODEC Group and Wyser International connected to the B–N Alliance. On 5 April 2012, two agreements were signed by Mr Goh, on behalf of Wyser International, and Mr Tony Lee of the NEDEC/KODEC Group. Both were backdated to 24 November 2011 (“the Wyser Agreements”). The first of these agreements (“the First Wyser Agreement”), entered into with KODEC, provided for a payment of US$0.02 per e-coated baseplate as follows:

1. Wyser assists in securing 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 ;

… 1) a monthly sales and management support service fee of US$0.02/pc X monthly Brink 2H shipping quantity under co-ordination of Wyser to Kodec (accepted quantity to LND based) starting from February 2012 till March 2013 ;

Payment details: Wire Transfer to the follows:

…

Name of beneficiary: Wyser International Limited

The second agreement (“the Second Wyser Agreement”), signed with NEDEC, provided as follows:

2. Wyser assists in securing a US$ 2.5 million as the co-sharing grant of fixture and tooling cost funded by...