Goh Guan Chong v AspenTech, Inc

• Jurisdiction: Singapore
• Judge: Andrew Ang J
• Judgment Date: 31 March 2009
• Neutral Citation: [2009] SGHC 73
• Docket Number: Suit No 264 of 2007
• Date: 31 March 2009
• Year: 2009
• Published date: 31 March 2009
• Plaintiff Counsel: Sean Lim (Hin Tat Augustine & Partners)
• Citation: [2009] SGHC 73
• Defendant Counsel: Carrie Gill Kaur (Colin Ng & Partners LLP)
• Court: High Court (Singapore)
• Subject Matter: Rules of construction,Contract,Whether bonus payable immediately upon termination of employee's employment,Company paying bonus of S$290,000 to employee in twelve quarterly instalments,Formation,Contractual terms,E-mail correspondence between company's officers suggesting that company treated bonus to be paid to employee as compensation for loss of stock options,Acceptance,Admissibility of evidence,Whether e-mail correspondence admissible as extrinsic evidence to interpret employment contract,Whether employee entitled to bonus as soon as he entered company's employ,Whether draft admissible as extrinsic evidence to interpret employment contract,Company presenting draft version of employment contract to employee before employment,Company offering S$108,989.62 as full and final settlement of all outstanding issues with employee,Employment contract stating that bonus be paid "through the payroll ... pending continued employment",Whether employee accepted company's offer,Implied terms

31 March 2009 Judgment reserved.

Andrew Ang J:

1 This is a case where a company, after having expended considerable effort in attracting a prospective employee, had a complete change of opinion regarding the employee after he joined it. This suit is the result of the failed and aborted relationship. The resolution of this case requires, inter alia, an interpretation of a clause in the employment letter pursuant to which the employee was taken on. In so doing, the court is required to consider whether evidence of previous negotiations and a draft contract may be adduced in evidence in support of interpretation of the final contract as signed.

The plaintiff’s case

2 The plaintiff is an engineering graduate who has worked in the consultancy industry for many years. Prior to joining the defendant, the plaintiff was employed by one ATOS ORIGIN (“ATOS”) and held the title of “Director, Enterprise Solutions, Asia Pacific”. By the end of 2000, the plaintiff was enjoying a base salary of US$150,000 per annum together with bonuses and allowances. Under a stock option plan implemented by ATOS, he was periodically granted options to acquire the stock of ATOS at discounted prices. Besides, according to the plaintiff, he was told by his supervisor at ATOS to expect a 15% increase in the amount of cash he would receive from ATOS in 2001.

3 The plaintiff was approached by one Patrick Fang (“Patrick”), who worked as a recruitment agent – commonly called a “head-hunter” – to fill a vacancy in the defendant. Patrick arranged for the plaintiff to attend several interviews with various officers of the defendant, both in Singapore and in the United States of America. The plaintiff averred that he made clear at those interviews that he would only leave ATOS if the defendant provided a better remuneration package. After the interviews, Patrick informed the plaintiff that the defendant was prepared to offer the plaintiff an annual salary package of about US$250,000. On top of the annual salary, the defendant would also pay the plaintiff a cash bonus of US$200,000 (“the Sign-on Bonus”). This bonus is the bone of contention between the parties.

4 This Sign-on Bonus was offered to him in order to compensate him for the loss of his ATOS stock options, which he would suffer if he were to join the defendant. However, Patrick further explained that, since the amount of the Sign-on Bonus was not insignificant, the defendant desired to pay the Sign-on Bonus in instalments so that it would not face a cash flow problem. The plaintiff was agreeable to this arrangement. (Under cross-examination, the plaintiff maintained that the Sign-on Bonus was the main incentive that induced him to leave his employment with ATOS in favour of the defendant.)

5 Subsequently, Patrick showed the plaintiff a draft copy of the defendant’s letter of offer of employment (“the Draft”). The relevant extracts of the Draft read as follows:

Dear Henry:

1. I am delighted to offer you the position of Vice President, Supply Chain/Asian Operations, at Aspen Technology, Inc. Your starting salary will be $7,916.66 semi-monthly, which converts to $190,000 when annualized. You will report directly to Chuck Deise, Sr. Vice President of Consulting Services and Partnerships. Your start date will be February 12, 2001.

2. Your annual comp/bonus plan will be 33% at plan. Target is equivalent to $62,700 annually. The specifics of your plan will be discussed in greater detail and mutually agreed upon between you and Chuck Deise.

3. You will receive a sign-on bonus of $200,000 to be paid in twelve equal quarterly installments [sic] of $16,666.66. This first amount will be payable in March 2001 and be repeated during the first pay period of the last month of each quarter until December 2003. Should you leave AspenTech voluntarily during this time period, you will be responsible for payment in full of your sign-on bonus.

4. Subject to Board approval, you will receive an option to purchase 15,000 shares of AspenTech Common Stock. Once approved, these stock options will vest at 1/16 at the end of each calendar quarter, beginning with the first full quarter following the date of the grant. The options expire on the tenth anniversary of the initial grant assuming continued employment.

[numbering added]

Upon being shown the above draft, the plaintiff sought clarification from Patrick regarding the import of the last sentence of paragraph 3. In particular, the plaintiff was interested to know if he was required to repay the Sign-on Bonus if he were to leave the defendant involuntarily. This might occur if he were to die while in employment or if the defendant became insolvent.

6 After checking with the defendant, Patrick subsequently informed the plaintiff that the Sign-on Bonus was:

… a guaranteed sum that [the plaintiff] would receive in full and as long as [the plaintiff] did not leave the Defendants voluntarily, [the plaintiff] would not have to repay the [Sign-on Bonus] to the Defendants and also that [his] wife would have no responsibility to do so even if [the plaintiff was] to die before December 2003 or otherwise.

[ see the plaintiff’s affidavit of evidence-in-chief filed on 16 June 2008, at [20]. ]

The plaintiff then sought to have this worded more precisely in the formal letter of offer of employment but Patrick dismissed it as being unnecessary.

7 The next significant episode occurred when the plaintiff met with the defendant’s Human Resource Director, one Amy Lau (“Amy”). The plaintiff again sought reassurance regarding the circumstances under which he would be required to repay the Sign-on Bonus. According to the plaintiff, Amy confirmed that the Sign-on Bonus would be paid to the plaintiff in full as long as the plaintiff did not leave the defendant voluntarily. Thus, in the event that the plaintiff left his employment with the defendant involuntarily, he would not be deprived of any outstanding payments, much less be required to repay the sums he had already received.

8 According to the plaintiff, it was upon such representations that he eventually signed the formal letter of offer of employment (“Employment Letter”). Although the Employment Letter was dated 4 January 2001, it seems clear that it was not actually signed on that day as discussions between the plaintiff and the defendant continued until as late as 8 January 2001. It was not clear why the date on the letter was never corrected to reflect the actual date the parties signed the letter. In any case, the germane parts of the Employment Letter recorded as follows:

Compensation & Benefit Package

1. Your compensation package includes a base salary and an incentive compensation designed to give you an annual on-target total cash of S$461,130 (Singapore Dollars Four Hundred Sixty-one Thousand One Hundred and Thirty).

2. Your gross base salary will be S$346,710 (Singapore Dollars Three Hundred Forty-six Thousand Seven Hundred and Ten) per annum to be paid in thirteen (13) instal1ments [sic].

3. Your package also includes an incentive plan targeted at 33% of your base salary at plan. Target is equivalent to S$114,420 (Singapore Dollars One Hundred Fourteen Thousand Four Hundred and Twenty) annually. The specifics of your plan will be discussed in greater detail and mutually agreed upon between you and Chuck Deise.

4. You will also receive a sign-on bonus of S$348,000 (Singapore Dollars Three Hundred and Forty-eight Thousand) to be paid in twelve quarterly installments [sic] of S$29,000 (Singapore Dollars Twenty-nine Thousand). The first amount will be payable through March payroll assuming your commencement date being February 12, 2001, and be repeated through the payroll of the last month of each quarter until December 2003 pending continued employment. Should you leave AspenTech voluntarily during this period, you will be responsible for repayment in full of your sign-on bonus.

5. Subject to Board approval, you will receive an option to purchase 20,000 shares of AspenTech Common Stock. Once approved, these stock options will vest at 1/16 at the end of each calendar quarter, beginning with the first full quarter following the date of the grant. The options expire on the tenth anniversary of the initial grant assuming continued employment.

…

6. Termination of employment by either party shall be subject to a notice period of three months except dismissal for cause.

[numbering added]

The Sign-on Bonus referred to in paragraph 4 is the Sign-on Bonus now expressed in Singapore dollars.

9 Thereafter, the plaintiff commenced employment with the defendant on 1 February 2001 as “Vice President, Supply Chain Consulting/Asian Operations”. During his five months employment with the defendant, the plaintiff was primarily in charge of two projects, one in Thailand and the other in Korea. In both those projects, the plaintiff sat as a member of a “steering committee”. As such the plaintiff was involved at the planning and co-ordination level of the projects. According to the plaintiff, various colleagues and customers commented positively about his work performance and he was unaware of any dissatisfaction with the same.

10 On 10 July 2001, the plaintiff was asked to attend a meeting with the defendant’s John Ayala (“Ayala”), the plaintiff’s immediate boss, and Amy. According to the plaintiff, it was at this meeting that Ayala informed the plaintiff that the defendant would be terminating his employment contract. However, neither Ayala nor Amy could provide the plaintiff with any legitimate reason for the termination. The plaintiff surmised that it was a cost-cutting measure. However, Amy did assure the plaintiff that the defendant would honour its obligations under the employment contract. She also requested that, to avoid any speculation among the staff, the plaintiff’s departure be explained to them as being for his personal reasons.

11 Under such circumstances, the plaintiff told Amy that he expected the defendant...