Excel Golf Pte Ltd v Allied Domecq Spirits and Wine (Singapore) Ltd (No 2)

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu J
• Judgment Date: 03 August 2004
• Neutral Citation: [2004] SGHC 162
• Court: High Court (Singapore)
• Year: 2004
• Published date: 06 August 2004
• Plaintiff Counsel: S H Almenoar, Raji Ramason and Cheryl Lim (Tan Rajah and Cheah)
• Defendant Counsel: Ang Cheng Hock, William Ong and Tham Wei Chern (Allen and Gledhill)
• Subject Matter: Contract,Breach,Breach of oral agreement,Whether plaintiff failed to discharge its obligations under oral agreement,Whether terms breached were conditions,Whether defendant entitled to terminate oral agreement.,Formation,Whether four unsigned draft agreements were sufficient evidence of written contract between parties.,Evidence,Witnesses,Examination,Plaintiff failed to cross-examine defendant's witnesses on material parts of their evidence,Whether this could be treated as an acceptance of the truth of that part of the evidence,Whether rule in Browne v Dunne (1893) 6 R 67 applied.,Partnership,Evidence of formation,Parties agreed to share profits and losses,Whether parties in a partnership,Test to be applied,Partnership Act (Cap 391, 1994 Rev Ed) s 1(1).
• Citation: [2004] SGHC 162

3 August 2004 Judgment reserved.

Lai Siu Chiu J:

Introduction

1 Excel Golf Pte Ltd (“the plaintiff”) is a company incorporated in Singapore and, according to its objects upon its incorporation in 1985, it deals in computer hardware, software, accessories and office equipment. The objects do not include the staging of major professional golf tournaments, organising of golf-related travel and the sales and distribution of golfing equipment (as the plaintiff subsequently described itself to the public in promotional material.[1] The plaintiff’s managing director is Chuan Ian Campbell (“Chuan”) who is also a shareholder. Chuan has another company called Graham Brash Pte Ltd (“Graham Brash”), which retails books, magazines and stationery. The plaintiff’s biggest shareholder is one Paul Drayson (“Drayson”) who is also a director. Drayson was an accountant before he retired; he prepared budgets for the plaintiff for the subject matter of this trial. Allied Domecq Spirits and Wine (Singapore) Ltd (“the defendant”) is a Singapore-incorporated company. It is a subsidiary of Allied Domecq PLC (“the parent company”), a public company listed in the United Kingdom. The parent company’s world-wide businesses include the manufacture and distribution of spirits and wines and the operation of quick-service restaurants. The parent company owns, amongst others, a brand of Scotch whisky known as “Ballantine’s”, which the defendant markets and distributes in Singapore and in the Asia-Pacific region. The defendant’s regional president is Kenneth Mackay Burnett (“Burnett”).

The facts

2 Under an undisclosed agreement it had made with the organisers of the Professional Golfers’ Association (“the PGA”) European Tour, the plaintiff was the owner of the annual European Seniors PGA Tour (“EST”) tournament for the years 2002, 2003 and 2004.

3 In or about June 2001, the defendant’s management conceived the idea of sponsoring a seniors’ golf tournament as a form of promoting Ballantine’s whisky in Asia-Pacific including South Korea, then its biggest market. The defendant decided that its commercial director Nigel Parmley (“Parmley”) would take charge of the project. He was tasked with contacting the European PGA with a view to securing a golf tournament for the defendant to sponsor. Parmley eventually contacted one Andrew Stubbs of EST who put him in touch with one John Hadley (“Hadley”), the partner of EST in Australia and Asia.

4 In October 2001, Burnett and Parmley met with Hadley as well as Hadley’s associate Bob Tuohy of Tuohy Associates, an Australian events organiser. Hadley and Bob Tuohy presented a proposal (“the Tuohy proposal”) for the defendant to sponsor a golf tournament. In view of the cost involved (US$2m), Burnett and Parmley decided to, and did, submit the Tuohy proposal to the International Marketing Executive (“IME”) division of the parent company for consideration. The IME decides on marketing strategy for the products sold worldwide by the Allied Domecq group. Burnett[2] described IME as global custodians of Allied Domecq’s brands.[3] I should add that Hadley’s company Nutrius Pty Ltd (“Nutrius”) was subsequently appointed by a letter dated 20 January 2002 as a tournament consultant by the plaintiff for three years at a flat fee of US$25,000. In the appointment letter, the plaintiff agreed to pay Hadley[4] 10% of the profits from the event if the profits after tax exceeded US$25,000.

5 Shortly after October 2001, Burnett received a telephone call from Chuan inquiring if it was true that the defendant intended to sponsor a golf tournament. Burnett answered in the affirmative, whereupon Chuan suggested that the plaintiff and the defendant form a partnership to stage the golf tournament. A round of golf followed between them for Burnett and Chuan to discuss the latter’s proposal. At about the same time, IME reverted to Parmley to say the Tuohy proposal was too expensive, although it was a good idea.

6 According to Chuan, an in-principle agreement was reached after discussions between himself and Burnett on or about 9 October 2001 during their game of golf. The plaintiff would be appointed to organise and manage a golf tournament to be sponsored by the defendant, called Ballantine’s Legends of Golf (“BLOG”), once the parent company gave its approval.

7 Between November 2001 and February 2002, several meetings took place between representatives of the plaintiff and the defendant. Arising from those discussions, it is common ground that the following terms were agreed:

(a) The defendant would be the title sponsor whilst the plaintiff would organise the BLOG (“the Event”) for three years.

(b) The defendant would pay the plaintiff US$250,000 (“the management fee”) as the management fee for the Event in 2002.

(c) The defendant would underwrite the prize money of US$500,000.

(d) The plaintiff would properly promote and market the Event, including arranging for the appropriate television and media coverage.

8 The plaintiff disputed the defendant’s pleaded case that the following terms also formed part of the oral agreement:

(a) The parties would work as partners.

(b) The terms for staging the Event in 2003 and 2004 would be agreed only after the Event for 2002 had been held.

(c) The plaintiff would use the management fee to defray the costs involved, including securing a golf course, the fee payable to EST, television coverage and other publicity for the Event, so as to put the Event on EST’s calendar.

(d) The plaintiff would prepare, and regularly update, a detailed budget.

(e) The plaintiff and defendant would contribute financially towards the staging of the Event and share in the profits or losses which might arise.

(f) The plaintiff would procure additional or co-sponsors for the Event so as to minimise the costs charged for staging the Event.

9 In relation to item (e), the defendant contended that expenses to be borne by the plaintiff (such as the fee payable to EST) would be charged to the plaintiff’s account (“the EG account”), those to be borne by the defendant (such as the management fee) would be charged to the defendant’s account (“the AD account”), while expenses to be borne or shared by both parties would be charged to a common staging account (“the staging account”). Shortfalls in the staging account would first be covered by the plaintiff, but would ultimately be shared between the parties in the ratio 40:60 in favour of the plaintiff and the defendant respectively. Profits would likewise be shared. (Hereinafter, the EG, AD and staging accounts will be referred to collectively as “the three accounts”.)

10 It was not in dispute that Chuan had represented to Burnett and Parmley that he could stage the Event at a much lower cost (US$750,000) as compared with the Tuohy proposal.

11 In January 2002, Chuan introduced Burnett and Parmley to Matthew Murray (“Murray”). Murray is the son of a golf professional and, according to Chuan, was experienced in running golf tournaments; he is a shareholder and director of the plaintiff. Murray was the tournament director for the Event.

12 Another person who became involved in the Event was Charles O’Connor (“O’Connor”), the self-styled Chief Executive Officer of EventsAsia, which is actually a sole-proprietorship registered at his home address. According to O’Connor, EventsAsia was engaged by the plaintiff to assist with the Event’s management, promotion, media buying and sponsorship sales. I shall return to O’Connor’s role later.

13 On 4 February 2002, and at subsequent meetings, Parmley and other representatives of the defendant attempted to resolve the terms of the parties’ agreement with Chuan and Matthew. Chuan requested for moneys to start off the Event, specifically the sums of US$50,000 and US$6,000 for the deposits to be paid to the EST and for golf course rental respectively. The defendant paid US$50,000 direct to EST on 8 February 2002. On 18 February 2002, the plaintiff raised an invoice (“the first invoice”) which it described as a deposit towards the management fee. The defendant paid the invoice promptly. A second invoice from the plaintiff followed on 8 April 2002, a third on 11 April 2002, a fourth on 24 April 2002 and the fifth invoice was presented on 21 May 2002. All invoices were for S$50,000 each. The invoices were all paid by the defendant save for the fifth. Eventually, the defendant’s payments totalled US$140,500.97.

14 Between February and March 2002, Chuan presented the defendant with four draft agreements. However, due to various circumstances, the terms thereof were never finalised. The defendant itself presented the plaintiff with a fifth draft agreement (“the fifth draft”) on or about 15 August 2002, which the plaintiff did not accept. In the event, a formal agreement was never signed between the parties.

15 Besides meeting to finalise the terms of the formal agreement to be signed between the parties, the plaintiff’s and the defendant’s teams also met frequently for the plaintiff to update the defendant on the status of the preparations for the Event. The Event was to be held between 8 and 10 November 2002 at the Laguna Golf and Country Club (“the venue”). It was to be preceded by two days of Pro-Am (professional and amateur) tournaments on 6 and 7 November 2002.

16 In the initial months, the parties also met to discuss the press conference scheduled for 23 April 2002 (“the press conference”) to announce the Event. From late March 2002 onwards, minutes of meetings between the parties were prepared by Andrew Benbow (“Andy”), who worked until November 2002 as a consultant for the plaintiff. Benbow[5] also helped on the technical aspects of posting the budgets prepared by Drayson on the plaintiff’s website or e-mailing the same to make them available to all the principal parties, but he did not make decisions on the contents of budgets.[6]

17 The defendant initially assigned Tham Wai Ming (“Tham”), its financial and commercial...