Guy Neale and others v Nine Squares Pty Ltd

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 18 November 2013
• Neutral Citation: [2013] SGHC 249
• Court: High Court (Singapore)
• Docket Number: Suit No 314 of 2011
• Published date: 29 November 2013
• Year: 2013
• Hearing Date: 19 July 2012,14 August 2012,31 July 2012,04 July 2012,25 July 2012,18 July 2012,26 July 2012,10 July 2012,01 August 2012,27 July 2012,07 August 2013,14 July 2012,12 July 2012,16 July 2012,15 July 2012,17 July 2012,13 July 2012,30 July 2012,15 August 2012,06 July 2012,24 July 2012,23 July 2012,20 July 2012,09 July 2012,03 July 2012,11 July 2012
• Plaintiff Counsel: Ang Cheng Hock SC, William Ong, Kristy Tan, Jacqueline Lee and Bryna Yeo (Allen & Gledhill LLP)
• Defendant Counsel: Cavinder Bull SC, Kelvin Tan, Priscilla Lua and Lee Xin Jie (Drew & Napier LLC)
• Subject Matter: Trusts,Express trusts,Constructive trusts,Trade Marks and Trade Names,Invalidity,Well-known trade mark
• Citation: [2013] SGHC 249

Judith Prakash J: Introduction

This action, Suit No 314 of 2011 (“Suit 314”), was heard together with Suit No 955 of 2010 (“Suit 955”). The plaintiffs in both actions sued as a partnership in relation to a restaurant, bar and club business in Bali, Indonesia. While the plaintiffs identified themselves as partners, there was a dispute in Suit 314 as to whether they were indeed partners or only joint venturers.

The restaurant in Bali was, according to the agreement made between the first, second, third and fifth plaintiffs in January 2000, to be named “Ku de Ta”. However, in many of the documents that were generated in relation to the business over the years that followed, it was called “Ku De Ta” and I will use this latter spelling in this judgment. Further, I will refer to the restaurant business in Bali as “Ku De Ta Bali”.

The defendant, Nine Squares Pty Ltd (“Nine Squares”), is the registered owner of two trade marks in Singapore bearing the name “KU DE TA” (collectively “the Singapore Marks”). The plaintiffs’ claim in this action is for: a declaration that the Singapore Marks are held on trust for and should be transferred to the plaintiffs; or invalidation of the Singapore Marks.

The fifth plaintiff in both actions is an Australian, one Arthur Chondros (“Chondros”). Chondros was one of the founders of Ku De Ta Bali and it is his position that the Singapore Marks do not belong to the plaintiffs but to Nine Squares. He was made a party to both actions as a plaintiff because the actions were brought by the “partnership” in which he is still involved. He is, however, a dissenting partner in relation to the actions and gave evidence on behalf of Nine Squares. The submissions made by the plaintiffs were accordingly made on behalf of the first to fourth and the sixth plaintiffs.

Suit 955 was brought by the plaintiffs against a Singapore company, Ku De Ta SG Pte Ltd (“KDTSG”), in respect of its use of the name “Ku De Ta” for the restaurant cum bar/lounge/club (“Ku De Ta Singapore”) which KDTSG operates at the Skypark at the Marina Bay Sands development (“Marina Bay Sands”) in Singapore.

Apart from Chondros, the plaintiffs are Guy Neale (“Neale”), Aki Kotzamichalis (“Kotzamichalis”), Made Wiranatha (“Kadek”), White Horses Trading Company Limited (“WH Trading”) and White Horses Investments Limited (“WH Investments”). Together with Chondros, they are the owners of Ku De Ta Bali. Nine Squares is a company incorporated in the State of Victoria, Australia. At all material times, it had two equal shareholders, viz, Chondros and one Daniel Ellaway (“Ellaway”). By the time of the trial, however, Ellaway was no longer a shareholder whilst Chondros had become a minority shareholder and there was a new majority shareholder.

This judgment is in respect of Suit 314 but many of the facts recounted hereunder are relevant in respect of Suit 955 as well. The evidence that was adduced before me during the trial was admitted in both suits.

Background facts The founding of Ku De Ta Bali

In 1997, Chondros, who had previously operated a restaurant in Melbourne belonging to his family, moved to Bali in the hope of opening a restaurant there. In April 1999, he located a beach-front site which he thought would be suitable for a high-end dining destination. He then approached Kadek for assistance in obtaining the lease of the land. Kadek is an Indonesian citizen and native Balinese and was thus qualified to bid for and hold the lease. He was then, and still is, a successful businessman with many business interests including restaurants and clubs. Kadek lent his name to the bid and it was successful. Thereafter, at Chondros’ request, Kadek helped with part of the down payment for the lease. More investors were needed so Chondros approached Kotzamichalis, another Australian expatriate living in Bali, and Neale, an Australian working in Singapore, and they agreed to contribute funds for the establishment of the restaurant. Hereinafter I shall sometimes refer to these four men as the “founders”.

Chondros said that he himself came up with the name “Ku De Ta” for the proposed restaurant as a play on the phrase “coup d’état”, to signify his ambition of revolutionising fine dining in Bali. He claimed that this was prior to inviting financial contributions from Kotzamichalis, Neale and Kadek. However, Kadek said that he had had a role to play in suggesting that the original name “kudeta” be split up into “Ku De Ta” because the original word would have offended political sensitivities in Bali. What is accepted is that on 4 January 2000, Kadek applied to register the trade mark “KU DE TA” in class 42 (restaurants, etc) in Indonesia and, on 20 March 2001, it was registered under Kadek’s name as Trade Mark No 469240 (“the Indonesian Mark”).

The plaintiffs’ position is that the Indonesian Mark was and is held on trust for and on behalf of all of them while Nine Squares is adamant that the Indonesian Mark is held on behalf of Chondros only.

In February 2000, the founders entered into an agreement entitled “Heads of Agreement” (“the 2000 HOA”). All signed it except Kotzamichalis but no issue was made of his non-signature and it was common ground that the 2000 HOA bound all four founders.

The essential terms of the 2000 HOA are as follows. Clause 3 stated that Chondros would manage and control the operation of the “business”, and that he would receive a salary for doing so. The “business” was defined as “the restaurant business name [sic] ‘Ku De Ta’ to be carried out in Bali, Indonesia”. Clauses 4 to 7 of the 2000 HOA set out the founders’ respective entitlements to a share of the net profits of the business. Finally, cl 13 of the 2000 HOA stated that the 2000 HOA was to be governed by the laws of the State of Victoria, Australia.

Subsequent events in 2001 caused an adjustment in the profit and equity shares in the business, so that the figures stated in the 2000 HOA no longer reflected the true position. After the adjustments, the equity shares were distributed as follows: Neale 31%, Kadek 30%, Chondros 26.5% and Kotzamichalis 12.5%. These changes were not documented.

Managing Ku De Ta Bali

The restaurant was constructed in 2000. During construction the project ran out of funds and each of the founders had to contribute more money in proportion to his entitlement to profits. Chondros was the driving force behind the design, concept and construction of the restaurant but Kadek was also deeply involved. He had to carry on negotiations with the land owners and with the authorities for dispensation of the beach setback line requirement in order to construct the restaurant on the land closer to the sea front. He also obtained all necessary permits and licenses needed to establish and run the business including the restaurant and alcohol licenses. Subsequently he undertook to be the employer under Indonesian law of all the local staff and opened bank accounts in his name for the use of the business.

As had been agreed, after it opened, Chondros managed the daily operations of Ku De Ta Bali. In late 2002, he enlisted Ellaway to assist him in running the restaurant. In January 2003, Chondros procured the incorporation of a public company in Australia and this was subsequently converted into Nine Squares, a private company. At all material times prior to 2010, Chondros and Ellaway were equal shareholders in Nine Squares and its only two directors.

In July 2003, the founders met at the cigar lounge in Ku De Ta Bali. At that meeting, Chondros proposed that they appoint Nine Squares as the management company of the restaurant. Neale, Kotzamichalis and Kadek claimed that they did not agree and that they insisted that only Chondros act as the manager. Chondros however contended that all of them agreed to the transfer of management rights and duties to Nine Squares. All accepted however, that at that meeting they had agreed that instead of the monthly salary which Chondros had been receiving for managing Ku De Ta Bali, he should be paid a management fee. This was eventually fixed at 2.85% of net revenue.

In May 2005, Ellaway proposed that the business should engage Nine Squares as Ku De Ta Bali’s management company, and also that the amount of management fees should be increased. Neale, Kotzamichalis and Kadek said that they did not agree to these proposals, while Nine Squares claimed that Kadek agreed to increase the management fees to 3.5% of net revenue. In 2008, Ellaway proposed again that the founders sign a management agreement with Nine Squares, but this was not agreed to.

Registration of the name “KU DE TA”

In about October 2002, Chondros asked Ellaway to register the name “KU DE TA” as a trade mark in Australia. This was registered on 17 October 2002 in both their names. On 29 January 2004, Chondros and Ellaway assigned the Australian trade mark to Nine Squares. Neale, Kotzamichalis and Kadek claimed that they were not aware of these developments at the time.

On 16 February 2004, on the basis of the Australian trade mark, Nine Squares applied to the World Intellectual Property Organization for international registration of “KU DE TA” as a trade mark, designating Singapore as one of the countries for registration. “KU DE TA” was therefore registered in class 43 (restaurants, etc) as a trade mark in Singapore (Singapore Trade Mark No T0405181Z) with effect from 16 February 2004, with Nine Squares reflected as the registered proprietor (“1st Singapore mark”) Again, Neale, Kotzamichalis and Kadek claimed that they did not know of these developments at the time.

At some point before June 2007, Chondros separately told Kotzamichalis and Kadek that he had registered a number of “KU DE TA” trade marks overseas. Both claimed that they thought that Chondros had registered them for and on behalf of Ku De Ta Bali. In fact, Kotzamichalis replied that Chondros should get reimbursement for...