DyStar Global Holdings (Singapore) Pte Ltd v Kiri Industries Ltd

JurisdictionSingapore
CourtHigh Court (Singapore)
JudgeAnselmo Reyes IJ,Roger Giles IJ,Kannan Ramesh J
Judgment Date09 January 2020
Date09 January 2020
Docket NumberSuit No 3 of 2017

[2020] SGHC(I) 1

Singapore International Commercial Court

Kannan Ramesh J, Roger Giles IJ and Anselmo Reyes IJ

Suit No 3 of 2017

DyStar Global Holdings (Singapore) Pte Ltd
and
Kiri Industries Ltd

Yim Wing Kuen Jimmy SC, Teng Po Yew, andEunice Lau Guan Ting (Liu Guanting) (Drew & Napier LLC) for the plaintiff;

Dinesh Dhillon Singh, Margaret Joan Ling Wei Wei, Lim Dao Kai, Teh Shi YingandLing Ying Ming, Daniel (Allen & Gledhill LLP) for the defendants.

Case(s) referred to

DyStar Global Holdings (Singapore) Pte Ltd v Kiri Industries Ltd [2018] 5 SLR 1 (refd)

Robertson Quay Investment Pte Ltd v Steen Consultants Pte Ltd [2008] 2 SLR(R) 623; [2008] 2 SLR 623 (folld)

Senda International Capital Ltd v Kiri Industries Ltd [2019] 2 SLR 1 (refd)

Sunny Metal & Engineering Pte Ltd v Ng Khim Ming Eric [2007] 3 SLR(R) 782; [2007] 3 SLR 782 (refd)

Tan Kok Yong Steve v Itochu Singapore Pte Ltd [2018] SGHC 85 (distd)

Damages — Assessment — Breaching of non-compete and non-solicitation provisions — Whether reduction of prices caused by breach — Whether fall in sales caused by breach — Whether failure to increase prices caused by breach

Facts

In DyStar Global Holdings (Singapore) Pte Ltd v Kiri Industries Ltd[2018] 5 SLR 1 and Senda International Capital Ltd v Kiri Industries Ltd[2019] 2 SLR 1, interlocutory judgment with damages to be assessed was entered against Kiri Industries Limited (“Kiri”) and Manishkumar Pravinchandra Kiri for breaches of non-compete and non-solicitation provisions in the share subscription and shareholders agreement (“SSSA”) governing the conduct of the joint venture. The breaches related to three customers to which DyStar sold dyes: FOTL in Morocco; Hayleys in Sri Lanka; and Brandix in Sri Lanka.

Kiri solicited FOTL's business over the period February to June 2015. However, even after July 2015, Mr Patrick McFeely of FOTL continued to represent to DyStar that offers were being received from Kiri for dyes that were in competition with a particular dye, Remazol Black B 50%. No business was done between Kiri and FOTL. DyStar agreed in August 2015 to reduce the price of Remazol Black B 50%, and the prices for subsequent deliveries continued to be reduced. However, in late 2016, and again in 2018, DyStar raised the prices of the dye. In 2018, this was allegedly because Kiri did not seem to be competing against Remazol Black B 50%. DyStar claimed damages in respect of FOTL on the basis that it had to reduce its prices for Remazol Black B 50% in order to retain FOTL's significant purchases of that dye. Kiri submitted that there was no causal link between its breaches and the price reductions, alternatively that the chain of causation between its breaches and and the price reductions after August 2015 was broken.

In early March 2012, Mr Tharaka de Silva, DyStar's agent in Sri Lanka, was told by Hayleys that Kiri had approached it, offering Kirazol dyes as identical plug-ins of DyStar's Remazol dyes, and at substantially lower prices. Between 2012 and 2018, Kiri supplied considerable quantities of Kirazol reactive dyes to Hayleys. DyStar claimed damages on the basis that it lost sales to Kiri which DyStar would otherwise have made to Hayleys, although it did not claim that it lost all the sales made by Kiri. Kiri submitted that there was no causal link between its breaches and DyStar's fall in sales as its dyes were targeted at different markets, and Hayleys might have purchased its dyes from another supplier which provided dyes of a similar quality to Kiri's instead. Kiri also submitted that DyStar failed to act reasonably by mitigating its losses through price reductions.

Brandix informed Mr de Silva that Kiri was soliciting Brandix's purchase of reactive dyes in early March 2012 and at the end of 2012. In September 2013, Mr de Silva was told by Brandix that it was likely that DyStar's Remazol RGB dyes would be replaced by Kiri's dyes as they were lower-priced. Subsequently, Mr de Silva agreed that the prices of three of the dyes would not be increased in order to not lose the business. There were subsequent price increases, which Mr de Silva described as “the bare minimum”. DyStar claimed damages in respect of Brandix on the basis that it was unable to increase its prices of Remazol RGB dyes lest it lose the business to Kiri. Kiri again submitted that DyStar failed to establish a causal link between its breaches and any loss from the failure to increase prices.

Held, making the relevant orders:

(1) Kiri's approaches between February 2015 and June 2015, which breached the SSSA, gave FOTL the opportunity to extract a price concession from DyStar in July to August 2015. But for Kiri's solicitation and offer of a lower price, FOTL would not have raised with DyStar the issue of lowering the price for Remazol Black B 50%. This was a reasonably foreseeable outcome of Kiri's offers since it was commonplace to bargain using a competing offer. There was therefore causation for these initial price reductions. However, the continued incorrect representations by Mr McFeely broke the chain of causation for the price reductions after the January 2016 delivery as Mr McFeely could only use Kiri's offers as current alternatives for a reasonable period of time after they were made. His incorrect representations in 2016 were not a natural consequence of Kiri's earlier approaches, and were the effective or dominant cause of DyStar's loss from the price reductions for the March 2016 and subsequent deliveries. The court ordered that the figure for the August, September and November 2015, as well as January 2016 deliveries be extracted or recalculated: at [30], [31], [38] and [41].

(2) In respect of Hayleys, the court did not accept that DyStar would have lost the sales in any event due to Hayleys moving to the use of lower quality dyes: Hayleys obtained Kiri's assurances that the Kirazol dyes were of high quality. A report in 2017 also indicated that Hayleys returned to purchasing DyStar's dyes in part because of quality concerns over Kiri's Kirazol dyes. However, the court also did not accept the level of lost sales asserted by DyStar, being an average of its 2009 level of sales over 2012 to 2018 with an increase over that period. The figures relied upon by DyStar gave uncertain guidance on the sales it would have otherwise made, and it was likely that if Kiri had not been in the market, Hayleys would also have turned to obtaining supplies of dyes from another supplier, as it appeared to have done even while obtaining dyes from Kiri. Kiri's contention that DyStar should have reduced its prices to mitigate its losses was not supported by any evidence, and was not accepted. The court discounted the suggested average 2009 level of sales by 25% and ordered that the damages be recalculated: at [50] to [52], [54], [57] to [59] and [63] to [65].

(3) In respect of Brandix, Kiri's breaches of the SSSA had caused DyStar to be unable to increase prices on the occasion in September 2013. The extent and duration of the inability to increase prices caused thereafter was not clear, but it was accepted that a loss had been suffered and that damages should be assessed, even if with estimation. Damages were ordered to be calculated on the basis that DyStar would otherwise have been able to increase its prices by 10% for the Remazol RGB dyes for deliveries in 2014: at [75] and [78] to [80].

9 January 2020

Judgment reserved.

Roger Giles IJ (delivering the judgment of the court):

1 We use the acronyms and other terms defined in our judgment in DyStar Global Holdings (Singapore) Pte Ltd v Kiri Industries Ltd[2018] 5 SLR 1 (“the Judgment”). As described in the Judgment, DyStar became a joint venture company between Kiri and WPL/Senda in the dye industry. The conduct of the joint venture was governed by the SSSA. It contained, in cll 15.1(a) and 15.1(b), non-compete and non-solicitation provisions restricting the conduct of Kiri's own business in the dye industry (see [286] of the Judgment).

2 In the Judgment, we held that Kiri had breached cll 15.1(a) and 15.1(b) in respect of FOTL. On appeal, in Senda International Capital Ltd v Kiri Industries Ltd[2019] 2 SLR 1, the Court of Appeal held that Kiri had breached those provisions also in respect of Hayleys and Brandix. In the result, there was interlocutory judgment with damages to be assessed against Kiri and Manish, for DyStar in Suit 3 and for Senda in the counterclaim in Suit 4.

3 This is our judgment in the assessment of damages. Senda did not claim damages in addition to any damages to which DyStar was entitled, and the assessment proceeded in Suit 3 alone, without participation by Senda.

4 We note that the evidence of breach in the assessment hearing was in some respects fuller than in the hearing leading to the Judgment. No objection was made to this by either party.

FOTL

5 FOTL was a major DyStar customer in Morocco. DyStar supplied it with Remazol Black B 50%, a liquid reactive dye (and other dyes, but it claimed only in respect of that dye). Kiri's approaches to FOTL did not result in any sales of its dyes, but DyStar claimed damages on the basis that it had to lower its prices for Remazol Black B 50% in order that it not lose the business to Kiri.

Kiri's breaches

6 Kiri first approached FOTL on 2 February 2015. Mr Snehal Soni, Kiri's International Marketing Manager based in Gujarat, India, e-mailed Mr Sean McCaffery of FOTL, introducing himself and Kiri's reactive dyes and inviting requests for more information. A follow-up e-mail produced a response, in which Mr McCaffery, apparently aware that the Kiri products were powder dyes, said that FOTL was set up with a liquid dye dispensing system “therefore powder dyes for our main products are not of major interest”. Mr Snehal replied that he...

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2 cases
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