Datawork Pte Ltd v Cyberinc Pte Ltd

• Jurisdiction: Singapore
• Judge: Woo Bih Li JC
• Judgment Date: 25 June 2002
• Neutral Citation: [2002] SGHC 132
• Published date: 19 March 2013
• Court: High Court (Singapore)
• Plaintiff Counsel: David Chan and Chua Sui Tong (Shook Lin & Bok)
• Defendant Counsel: Vinodh Coomaraswamy and David Chan (Shook Link & Bok),Valerie Tan and Nadia Almenoar (Allen & Gledhill)

Judgment

GROUNDS OF DECISION

INTRODUCTION

1. The Plaintiff Datawork Pte Ltd (Datawork) is a company incorporated in Singapore and carries on business, inter alia, as a manufacturer and distributor of computer related products.

2. The Defendant Cyberinc Pte Ltd (Cyberinc) is also a company incorporated in Singapore and carries on business, inter alia, as a manufacturer of computer and telecommunication apparatus.

3. In about January 2000, the parties entered into an agreement in which Cyberinc appointed Datawork as the sole distributor of certain products of Cyberinc called Z-station, Z-media and Z-pac. The Z-pac comprised one Z-station and one or two Z-media. It is a mobile hand-held karaoke device.

4. The relevant terms of the Distributorship Agreement were:

(a) The distributorship would be for a minimum of six months plus one month.

(b) The minimum purchase quantity by Datawork was 3,000 units of Z-pac. If this target was reached, the distributorship would continue for another six months with another minimum quantity to be purchased.

(c) The commencement date of the sole distributorship was the date of the first delivery of the products.

(d) Datawork was obliged to order 1,000 units of Z-pac for the first three months.

5. There was also a provision i.e Clause 5 of Cyberincs obligations (Clause 5) which provided for Cyberinc to buy the unsold units from Datawork and its dealers should Cyberinc terminate the distributorship prior to its expiry. In view of the emphasis which Datawork placed on this provision, I set it out below:

5) In the event that CyberInc Pte Ltd decides to early terminate the sole distributorship agreement with Datawork Pte Ltd, it will have to buy up all the remaining stock of the product from Datawork Pte Ltd and its dealers (if Datawork Pte Ltd deems necessary) at the same price Datawork Pte Ltd has paid to CyberInc Pte Ltd.

6. It was common ground that the first delivery of the products was on 31 March 2000. Hence the Distributorship Agreement commenced then and expired on 31 October 2000.

7. Datawork alleged that:

(a) In breach of the Distributorship Agreement, Cyberinc appointed TV Media Pte Ltd (TV Media) on or about September 2000 to distribute and/or sell and/or market the products.

(b) In so doing, Cyberinc had evidenced an intention not to be bound by the Distributorship Agreement and had repudiated the same.

(c) By an e-mail dated 5 October 2000, Datawork had accepted the repudiation and required Cyberinc to re-purchase the unsold products still in the possession of Datawork and/or its dealers.

(d) The acceptance of the repudiation was repeated on 12 December 2000 by a letter from Dataworks solicitors to Datawork.

8. Thus, in so far as the remaining products in the possession of Datawork and its dealers had not yet been paid for by Datawork, Cyberinc was effectively to take them back through the re-purchase. In so far as such products had already been paid for by Datawork, Cyberinc had to pay for them in its re-purchase.

9. There was also a claim for miscellaneous expenses but this was eventually resolved when the parties appeared before me. Hence, I need say no more about it.

10. The defence was that Datawork was granted only a sole distributorship instead of an exclusive distributorship. This meant that while Cyberinc could not legally have appointed another distributor, it could sell the products itself or through its own agents. Cyberinc had contracted with TV Media to, inter alia, produce a TV commercial to promote the products. TV Media would also sell the products at its outlets and such sales were made on behalf of Cyberinc for which TV Media would receive a commission.

11. Cyberinc also alleged that Datawork was estopped from alleging any breach by Cyberinc and that Datawork had acquiesced in Cyberincs intention to contract with TV Media. This was because Dataworks SC Ang had known of and had agreed to the same.

12. Lastly, Cyberinc denied that it was obliged to re-purchase the remaining products in the possession of Datawork and its dealers under Clause 5 as Cyberinc did not terminate the Distributorship Agreement.

13. Cyberinc also counterclaimed:

(a) payment from Datawork for the unpaid purchase price of 400 Z-pac units which had been delivered to Datawork,

(b) damages for 600 units which Datawork had ordered but did not want delivery of,

(c) damages for failure to order a minimum quantity of 3,000 units.

TRIAL JUDGES DECISION

14. The trial judge, District Judge Tan Peck Cheng, decided that Cyberinc was in breach of contract and there was no acquiescence by Datawork. However she also concluded that Clause 5 requiring Cyberinc to re-purchase the products from Datawork did not apply because it was not Cyberinc who terminated the Distributorship Agreement but Datawork and the provision applied only in the former, but not the latter, situation.

15. The trial judge also decided that Datawork suffered only nominal damages as its sales of the products were not doing well in any event.

16. Accordingly, the trial judge fixed the damages for Cyberincs breach at S$2,500 to be paid by Cyberinc to Datawork and dismissed the other reliefs sought by Datawork. She also granted judgment against Datawork to pay Cyberinc the purchase price of the 400 units delivered but not yet paid for. The rest of the reliefs sought by Cyberinc were disallowed. Datawork was required to pay costs to Cyberinc which the trial judge fixed at S$18,000.

THE APPEALS

17. Datawork appealed to the High Court against that part of the trial judges decision which:

(a) ordered payment of only $2,500 to Datawork as damages,

(b) dismissed the other reliefs sought by Datawork,

(c) granted Cyberinc judgment for the purchase price of the 400 units, and

(d) costs.

18. Cyberinc also appealed to the High Court. Its appeal was against that part of the decision which:

(a) ordered Cyberinc to pay $2,500 as damages to Datawork,

(b) disallowed the rest of the reliefs sought by Cyberinc, and

(c) the quantum of costs fixed by the trial judge.

MY DECISION

19. Both appeals were heard by me on 13 May 2002. After hearing arguments, I dismissed the appeal by Datawork and allowed the appeal by Cyberinc in part (because Cyberincs computation of the balance number of units to make up the minimum quantity was incorrect). My decision meant that:

(a) Cyberinc was not in breach of contract and did not have to pay any damages to Datawork.

(b) Cyberinc was still entitled to be paid for the 400 units delivered to Datawork (an earlier batch of 300 units had been delivered and paid for already).

(c) Cyberinc was entitled to damages to be assessed in respect of 600 units which Datawork had ordered but did not want delivery of.

(d) Cyberinc was entitled to damages to be assessed for Dataworks failure to order 1,700 sets to make up the minimum quantity of 3,000 units.

20. I also granted costs of Cyberincs appeal and of the hearing below to Cyberinc and costs of Dataworks appeal to Cyberinc.

MY REASONS

21. Although much time and effort was spent by both Counsel for Datawork and Cyberinc on arguments as to whether TV Media was or was not a distributor of Cyberinc and the interpretation of Clause 5, I decided the appeals on the ground that Datawork was estopped from alleging that Cyberinc was in breach of contract. Datawork had also acquiesced in the appointment of TV Media by Cyberinc to promote and sell the products.

22. On this issue, the trial judge had ruled against Cyberinc. I set out below the reasons why I reached the opposite conclusion.

23. Mr Tan Peng Khoon (PK Tan) had joined Cyberinc in September 1999. He was its Marketing Director. The managing director was Mr Ng Kai Kong (KK Ng).

24. Datawork is run by PK Tans sister Lucillia Tan Sok Cheng, also referred to as SC Ang, and their brother Larry Tan. It was PK Tan who introduced Datawork to Cyberinc as his sisters company. At all material times, all parties were aware of PK Tans relationship with SC Ang.

25. Consequently the Distributorship Agreement was entered into.

26. SC Ang did not dispute that she was aware of Cyberincs intention to use TV Media to promote and sell the products. Indeed, she learned of this from a meeting with KK Ng and her brother PK Tan. However she claimed that she had thought that TV Media would be buying the products from Datawork and not from Cyberinc.

27. In her Affidavit of Evidence-in-Chief (AEIC), she said at paras 32 and 33:

32. Sometime in or around the 2^nd or 3^rd week of September 2000, KK Ng and my brother came to the Plaintiffs offices to discuss advertising the Defendants products on television. They informed me that the Defendant was intending to advertise on television through TV Media . He gave me the impression that TV Media would be producing the advertisements and selling the Defendants products at their retail outlets as well as through mail order and that any sales by TV Media would be made from stock purchased from the Plaintiff. In effect, the impression which he gave me was that TV Media would purchase its stock from the Plaintiff directly. Given the practice in the previous marketing efforts outlined above and our understanding of both parties obligations under the Distribution Agreement, I naturally assumed that this would continue to be the case.

33. I was therefore quite pleased when I heard the news from KK Ng and my brother as I believed that our sales would improve after the advertisements. I had no reason to object to the advertisements as I understood that the terms of the Distribution Agreement would be adhered to by the Defendant.

28. KK Ngs evidence on this point was in para 42 of his AEIC where he said:

42. Thus, sometime in August 2000, PK, SC Ang and I had a meeting to discuss advertising through TV Media. I recall that SC Ang was pleased to hear about the advertisement. She felt that any efforts to promote the product would be worth trying. She...