Commodities Intelligence Centre Pte Ltd v Mako International Trd Pte Ltd

• Jurisdiction: Singapore
• Judge: Lee Seiu Kin J
• Judgment Date: 31 May 2022
• Docket Number: Suit No 924 of 2019
• Court: High Court (Singapore)

Commodities Intelligence Centre Pte Ltd

and

Mako International Trd Pte Ltd and others

[2022] SGHC 131

Lee Seiu Kin J

Suit No 924 of 2019

General Division of the High Court

Agency — Duties of agent — Fiduciary obligations — Whether agent owed fiduciary obligations

Civil Procedure — Striking out — Failing to comply with discovery obligations — Suppressing of documents during discovery — Whether court could strike out claim or defence in respect of unpleaded allegation of suppression — Whether court could strike out claim or defence in toto — Order 24 r 16(1) Rules of Court (2014 Rev Ed)

Companies — Incorporation of companies — Lifting corporate veil — Whether there was any principle guiding application of piercing doctrine

Contract — Contractual terms — Implied terms — Whether there existed implied term of good faith at law — Whether there existed implied term of loyalty at law — Whether it was permissible to imply terms of good faith or loyalty into contract as matter of fact in case where no fiduciary relationship was found to exist

Equity — Dishonest assistance — Accessory liability — Requisite mental state — Whether breaches of fiduciary duty were necessarily dishonest

Equity — Fiduciary relationships — When arising — Ad hoc fiduciary relationships — Considerations which could give rise to ad hoc fiduciary relationship — Whether there was clear, principled and accepted approach to assess existence of ad hoc fiduciary relationships — Whether expertise was relevant in determining existence of ad hoc fiduciary relationship

Equity — Fiduciary relationships — When arising — Agency — Agent lacking power to affect his principal's legal relations with third parties — Whether agent without power to affect his principal's legal relations with third parties could be presumed to owe fiduciary obligations

Held, dismissing the claim and allowing part of the counterclaim for US$10,281.43:

Preliminary issues raised by CIC at the end of trial

(1) The court had the power under O 24 r 16(1) of the ROC 2014 to strike out a defence if a defendant failed to comply with his discovery obligations. However, CIC did not plead their allegation that Jonathan and Wayne had deliberately suppressed the disclosure of their relevant correspondence despite the fact that its Statement of Claim was amended after the start of trial. The allegation was therefore not properly put into issue and was thus not considered. In any event, CIC's submission that the whole defence should be struck out was overly general. No argument was made as to how the lack of the allegedly suppressed correspondence bore on any of CIC's claims, and this failed to strike a balance between the administration of justice on one hand, and the principle that a litigant should not ordinarily be denied the opportunity for his defence or claim to be considered on its merits on the other: at [24] to [27].

(2) During Mr Wang's cross-examination, counsel for CIC did not invite him to respond to any of the allegations levelled against him in CIC's written closing submissions. Having failed to give him such an opportunity, CIC's bold claim that Mr Wang was “guilty of perjury” could not properly be assessed or determined: at [29].

(3) In Jasviderbir Sing Sethi v Sandeep Singh Bhatia[2021] SGHC 14 (“Jasviderbir Sing”), the court declined to accord corroborative weight to three witnesses' evidence because their accounts were “too clear, too categorical and too consistent”. In the present case, Wayne also took positions which were consistent with those taken by Jonathan. However, no parallel could be drawn between the cases because the witnesses in Jasviderbir Sing presented their evidence as accounts which they each independently recalled. The fact that they had replicated each other's affidavits of evidence-in-chief (“AEIC”) thus cast doubt on the implied premise that their evidence was their own. By contrast, Wayne's AEIC candidly admitted that he had the benefit of reviewing Jonathan's AEIC, and, on that footing, he adopted the portions of Jonathan's AEIC to the extent that it related to him alone, or to both him and Jonathan collectively. While this reduced the probative value of Wayne's evidence, it did not deprive it of all evidential weight as it was not an implied premise of Wayne's AEIC that his evidence had been prepared without any reference to the contents of Jonathan's AEIC: [30] to [33].

(4) CIC also advanced other bases on which it argued Wayne's evidence ought to be disregarded. These were not meritorious. First, the fact that Wayne lacked some familiarity with the documents exhibited in his AEIC did not, in the context of this case, deprive his evidence of any weight. Second, CIC failed to establish that Wayne was contriving his evidence because he was reliant on Jonathan for the funding of their defence to CIC's suit. In any case, CIC had notice of the manner in which Wayne's AEIC was prepared and had cross-examined him on this issue. Therefore, the weight to be given to Wayne's evidence was to be determined based on the extent to which cross-examination affected the credibility of his account. Such effect was minimal: at [34] to [36].

Issue 1: Nature of the parties' relationship

(5) The parties disputed the proper translation of the Service Agreement. CIC's translator, Mr Tan, gave evidence that Mako was described as an “agent” in the agreement, and Mr Wang testified that the term should instead be read as “broker”. However, this translation dispute was unhelpful because even if the term was read as “agent”, this label was notoriously broad and did not alone shed light on the legal obligations owed by Mako as an “agent”. In particular, the issue of whether Mako owed fiduciary obligations to CIC was an evaluative question which required the court to examine the substantive characteristics of their relationship: at [40] and [41].

(6) The term “agency” was best used to connote an authority or capacity in one person to create legal relations between a person occupying the position of principal and third parties. Although this definition did not reflect the full range of persons who could fairly be described as “agents”, it was a description of the paradigm agent which could be presumed to owe fiduciary obligations unless such presumption was rebutted. The power to bind one's principal to contracts; to dispose of his property; and generally, to expose him to liability, placed that principal in a uniquely vulnerable position. Such vulnerability was distinct from the ordinary commercial risk contracting parties had to bear, and, in the face of such vulnerability, the presumptive imposition of onerous fiduciary obligations over the agent's exercise of such powers was justified: at [46] to [51].

(7) Although a non-paradigm agent could also owe fiduciary obligations, this was not a conclusion to be presumed from his “agency” alone. Instead, to determine whether such obligations were owed, the court needed to determine whether an ad hoc fiduciary relationship arose. In determining this, the court would take into account relevant considerations such as the principal's vulnerability, the scope of the agent's powers or discretions, and the agent's expertise. Such considerations, however, were far from definitive as the courts had generally avoided pinning down facts which conclusively justified the imposition of fiduciary obligations. Furthermore, an effective theory of fiduciaries had yet to be formulated and accepted. Thus, the best which the court could do until such a theory came about, was to take into account the relevant considerations: at [52] to [55].

(8) CIC admitted that Mako did not have any authority to enter into or execute any agreement on its behalf. Further, CIC was also unable to explain away the fact that the Service Agreement provided that CIC was obliged to provide “buyer resources” and that Mako was only obliged to provide “seller resources” when procuring back-to-back trades. This term substantially minimised the scope of work Mako was contracting to take on under the Service Agreement, and, when considered alongside the circumstances underlying the formation of the Service Agreement, as well as the characteristics of CIC and Mako's relationship as the Service Agreement and the Transaction panned out, the correct conclusion was that CIC and Mako's relationship was exclusively grounded in contract. Although it was possible for a commercial counterparty to be an ad hoc fiduciary, the nature of CIC and Mako's relationship did not support that conclusion: at [42] to [44] and [56] to [67].

(9) CIC also claimed that Jonathan and Wayne had agreed to be its “agents” in their own capacities, outside their offices as directors of Mako. Thus, they were said to owe the same fiduciary and other obligations personally to CIC. The factual premise of this claim was that Jonathan and Wayne had asked CIC to provide them with name cards so as to be able to represent CIC in negotiations with prospective trading counterparties. By this argument, CIC sought to stretch a minor fact into a major conclusion. The factual premise of CIC's claim was not enough to establish a relationship of agency with Jonathan and Wayne personally, much less a fiduciary relationship: at [68] to [73].

Issue 2: Obligations owed by Mako to CIC

(10) As it was determined that Mako and CIC were not in a fiduciary relationship, Mako did not owe CIC fiduciary duties of good faith and loyalty in equity. CIC's alternative argument that these duties ought to be implied into the Service Agreement and, thus, owed at law, was not accepted. First, Ng Giap Hon v Westcomb Securities Pte Ltd[2009] 3 SLR(R) 518 had rejected the existence of an implied term of good faith at law and the Court of Appeal's reasoning applied with equal force to a duty of loyalty. CIC could therefore only argue that such duties ought to be implied as a matter of fact....