Enholco Pte Ltd v Schonk, Antonius Martinus Mattheus and Another

• Jurisdiction: Singapore
• Judge: Choo Han Teck J
• Judgment Date: 04 February 2015
• Neutral Citation: [2015] SGHC 20
• Court: High Court (Singapore)
• Docket Number: Suit No 212 of 2013
• Year: 2015
• Published date: 11 February 2016
• Hearing Date: 13 August 2014,20 August 2014,19 August 2014,17 November 2014,14 August 2014,15 August 2014
• Plaintiff Counsel: Dr Lau Teik Soon and Karuppiah Chandra Sekaran (Lau Chandra & Rita LLP)
• Defendant Counsel: See Chern Yang (Premier Law LLC)
• Subject Matter: Employment law,Employees' duties
• Citation: [2015] SGHC 20

Choo Han Teck J:

The plaintiff is a company incorporated in 1988. Its business is mainly in the sale of spare parts and providing consultancy services in the oil and gas industry. Haank Jan Gerhard (“Gerhard”) is its managing director.

Schonk Antonius Martinus Mattheus (“Mattheus”) was an employee of the plaintiff from 1 September 1989 till 24 August 2012. He incorporated the second defendant company on 5 April 2012 and is its sole shareholder and director. This fact was not known to the plaintiff until 16 August 2012. The plaintiff’s case against both defendants is that Mattheus was acting in conflict of interests and in breach of his fiduciary duties to his employer, the plaintiff. It alleges that Mattheus acted in detriment to the interests of the plaintiff. Thus, on 24 August 2012 Mattheus was sacked from the plaintiff company.

In this action, the plaintiff claims a sum of $1,676,547.56 as losses incurred by reason of Mattheus’ breach of duty. It is also claiming damages for the loss of profit amounting to $2,800,000 to $4,200,000.

Mattheus claims that he was not in breach of his obligations and duties as an employee by incorporating the second defendant because the plaintiff had known about the second defendant’s existence. Mattheus counterclaims against the plaintiff for wrongful termination and claims $150,000 being five months’ salary in-lieu of notice plus $50,000 for reimbursement of expenses, car financing that the plaintiff ought to have paid for Mattheus but did not.

Although the critical event was the sacking of Mattheus on 24 August 2012, the opposing cases go back some years. Gerhard says that he was planning to retire and from 2009 had begun discussions with Mattheus with the view that Mattheus (who is 62 years old at the trial) would buy between 49% to 100% of Gerhard’s shares in the plaintiff. Gerhard was 70 years old at the time of the trial. The negotiations failed. Gerhard says that instead of paying him for his shares in the plaintiff, Mattheus went to incorporate the second defendant.

Mattheus claims that the second defendant was incorporated to take over the business of ‘Unit 2’. ‘Unit 2’ is the name of a division of the plaintiff which dealt with certain customers and was, accounting-wise, dealt with separately in the plaintiff’s accounts. At all material times Mattheus was in charge of Unit 2.

Mattheus now says that in July 2001 he and the plaintiff (through Gerhard) concluded an oral contract (“the Unit 2 Agreement”) in which Mattheus was to take over the entire assets, business, and undertakings of Unit 2. In exchange, he will relieve the plaintiff of the costs of operating Unit 2.

Plaintiff denies the Unit 2 Agreement. Gerhard was the key person from the plaintiff who dealt with Mattheus. He testified that throughout the years from 2001, Mattheus had never once claimed that the plaintiff had ceded or sold or transferred Unit 2 to Mattheus. In the negotiations concerning the sale of Gerhard’s shares in the plaintiff to Mattheus, the latter had not once mentioned that the valuation of the shares was wrong because Unit 2 ought to have been excluded as an asset or division of the plaintiff. Gerhard testified, and I believe his testimony, that Mattheus had never claimed to own Unit...