Case Note
| Author | Ben Chester CHEONG LLM (Cambridge), LLB (First Class Honours) (University of Exeter); Advocate and Solicitor (Singapore), Solicitor (England and Wales); Lecturer, School of Law, Singapore University of Social Sciences. Muhammad BIN K M A JAHABAR SATHIK LLB Candidate, School of Law, Singapore University of Social Sciences; Diploma in Law & Management, Temasek Polytechnic; Paralegal, Heng, Leong & Srinivasan LLC. |
| Publication year | 2022 |
| Citation | (2022) 34 SAcLJ 10213 |
| Published date | 01 March 2022 |
| Date | 01 March 2022 |
1 The litigation involving Goh Chan Peng (“Goh”) and the Beyonics Group could be said to be one of the most long-drawn Singapore corporate disputes in recent times, spanning across five different reported judgments and delving into a wide area of laws, including company law and civil procedure. While this is primarily a case note about the latest cases, readers should refer to the procedural history of the cases for a greater understanding of the subject matter.
2 The latest case in the dispute primarily between Goh and the Beyonics Group can be found in Beyonics Asia Pacific Ltd v Goh Chan Peng [2021] SGCA(I) 2 (“2021 CA”) upon which this case note is built. Immediately preceding 2021 CA were Beyonics Asia Pacific Ltd v Goh Chan Peng [2020] 4 SLR 215 (“2020 SICC”) and Beyonics Asia Pacific Ltd v Goh Chan Peng [2020] 5 SLR 235 (“SICC Cost Order”). For the purpose of this case note, SICC Cost Order is outside the remit of this discussion.
3 Before the 2021 CA and the 2020 SICC decisions, the dispute between Goh and the Beyonics Group can be traced back to two even earlier decisions, ie, the High Court decision in Beyonics Technology Ltd v Goh Chan Peng [2016] 4 SLR 472 (“2016 HC”) which was then appealed to the Court of Appeal in Goh Chan Peng v Beyonics Technology Ltd [2017] 2 SLR 592 (“2017 CA”).
4 As this case note is concerned primarily with directors' duties and abuse of process, it will be split into three distinct sections: (i) breach of fiduciary duties; (ii) whether the breach of duties caused the loss; and (iii) whether there was an abuse of process.
5 In 2021 CA, 2020 SICC, 2017 CA and 2016 HC, the background may be summarised expediently as follows: Beyonics Technology Ltd (“BTL”) was incorporated in Singapore and was the parent company of the Beyonics Group. Other corporate entities included: (i) Beyonics Technology Electronic (Changsu) Co Ltd (“BTEC”) incorporated in China to own and operate a baseplate manufacturing facility in China; (ii) Beyonics Precision (Malaysia) Sdn Bhd (“BPM”) incorporated in Malaysia to own and operate a baseplate manufacturing facility in Malaysia; and (iii) Beyonics Asia Pacific Limited (“BAP”) incorporated in Mauritius and while BAP did not own or operate manufacturing facilities, it was the sales company for the baseplates manufactured by BTEC and BPM.
6 On the other side of the fence was Goh, who was a director of BTL. BTL with its many subsidiaries would constitute the “Beyonics Group”. The business of the Beyonics Group involved the contract manufacturing of base plates for hard disk drives. One of its key customers was Seagate. The process of manufacturing the base plates consisted of two stages. At the first stage, the baseplates would be die-casted and e-coated (“Stage 1”). The second stage involved precision machining on the baseplates before they were supplied to customers (“Stage 2”).
7 In October 2011, the Beyonics Group's factory in Thailand was destroyed as a result of severe flooding. A concerned Seagate wanted to ensure it had a sufficient supply of baseplates for the hard disk drives produced. In November 2011, an alliance was formed between the Beyonics Group and its competitors, Nedec Co Ltd and Kodec Co Ltd (collectively known as the “NedKo Group”). The alliance was known as the “B-N Alliance” and was formalised through an agreement between the Beyonics Group and the NedKo Group.
8 After the B-N Alliance was formed, Goh entered into two separate agreements with the Nedko Group on behalf of Wyser International Limited (“Wyser”), which was beneficially owned and controlled by him. Under this agreement, Wyser received payment for its assistance in securing business from Seagate (the “Wyser Agreements”).
9 Soon, disagreements arose between Goh and the other directors of the Beyonics Group. Goh tendered his resignation on 9 January 2013. The Beyonics Group's business with Seagate eventually declined and by the end of 2014, Seagate had ceased its business with the Beyonics Group.
10 BTL claimed that Goh had breached his fiduciary duties owed to it, among other things.
11 The Court of Appeal in 2017 CA partly affirmed the decision in 2016 HC2 and held that Goh was in breach of his fiduciary duties owed to BTL and the Beyonics Group,3 as Goh was instrumental in approving the B-N Alliance and that it was Goh who convinced Seagate to secure the contract between both parties.4 As for the payment under the Wyser Agreements, the High Court agreed that they were appropriately characterised as bribes5 and that Goh had assisted the NedKo Group to build its capabilities for the Stage 1 and Stage 2 works.6
12 The High Court in 2016 HC also had to consider whether the loss of profit as a result of the diversion of the Stage 2 work to the NedKo Group from January 2012 to January 2013 (the “Diversion Loss”) and the loss of profit as a result of the loss of future baseplate business from Seagate (the “Total Loss”) were caused by Goh. The High Court in 2016 HC held that Goh had not succeeded in discharging the evidential
13 Goh and Wyser appealed against the decision of the High Court in 2017 CA. Goh argued that since BAP was the party that invoiced Seagate for the base plates and received payment from it, BTL had no grounds to claim for any loss of profit. BTLs counter argument was that Goh should not be able to characterise BTLs claims as claims for reflective loss as this was not pleaded in his pleadings.9
14 The Court of Appeal partially allowed the appeal on the basis that the Diversion Loss and Total Loss were suffered by BAP and not BTL, as the baseplates manufactured by BPM and BTEC were sold to BAP and BAP in turn sold them to and invoiced Seagate and was accordingly the entity that suffered the losses. The Court of Appeal recognised that while the result of this ruling would be harsh given the egregious nature of Goh's breaches, recognising the single economic entity concept would undermine the doctrine of separate legal personality which was the bedrock of company law.10
15 These findings were only a partial victory for the Beyonics Group because the Court of Appeal in 2017 CA held that BTL had no grounds to recover the Diversion Loss and Total Loss awarded by the High Court in 2016 HC, as these losses were suffered by BAP.12 The other subsidiary companies, including BAP, thus commenced a new action against Goh and Wyser in 2020 SICC and claimed for both the Diversion Loss and Total Loss which had been disallowed by the Court of Appeal in 2017 CA.
16 On the flipside, Goh and Wyser argued that the commencement of 2020 SICC was an abuse of process as the current claims by the Beyonics Group could have been raised in the previous suits. Goh and Wyser relied
17 The High Court in 2020 SICC held that the claims by the subsidiary companies could have been brought in 2016 HC15 and held that BAP and the other subsidiary companies should have been joined as parties in 2016 HC.16
18 The subsidiary companies filed an appeal against the decision of the High Court in 2020 SICC for having struck out their claims on the ground of abuse of process.
19 The Court of Appeal in 2021 CA held that the claims in 2020 SICC should not have been struck out by the High Court.18 Before analysing this issue, the Court of Appeal took into account the key principles in relation to an abuse of process claim; this in turn informed the court of its procedural powers and that a finding of an abuse of process depended on the specifics and circumstances of each case.19
20 While the Court of Appeal acknowledged that the claims in 2020 SICC could have been raised in 2016 HC, it was of the opinion that this was not the end of the enquiry as “could have” does not necessarily equate to “should have”.20
21 The reasoning given by the Court of Appeal on why the claims should not have been struck out can be summarised as follows: Firstly, the Court of Appeal was of the opinion that Goh and Wyser were unable to show that it would be oppressive for them to be subject to the claims in 2020 SICC. This burden was held to be on the respondents.21
22 Secondly, the Court of Appeal held that the issue of whether BTL was the proper plaintiff was not a major issue in the trial of 2016 HC and that this was a contributing factor to how the respondents had chosen to move forward in this case. The Court of Appeal held that there was no pleading which specifically stated that the claims for the Diversion Loss and the Total Loss under the statement of claim should have been brought by BAP or by any other party.22
23 The Court of Appeal was of the opinion that whether BTL was the proper plaintiff was not a major issue in 2016 HC. It held that whether the issue had been pleaded was a technical question and that the purpose of pleadings was to ensure that each party would be aware of the respective arguments against it and no party would be taken by surprise.23
24 The Court of Appeal held that it was hard to conclude that the Beyonics Group should have added the subsidiary companies as parties to 2016 HC, as it was an expensive process which would have led to a delay in the adjudication process.24
25 Lastly, the Court of Appeal held that at the time the issue of proper...
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