Guy Neale v Nine Squares Pty Ltd

JurisdictionSingapore
Judgment Date22 December 2014
Date22 December 2014
Docket NumberCivil Appeal No 172 of 2013 and Summons No 2011 of 2014
CourtCourt of Appeal (Singapore)
Guy Neale and others
Plaintiff
and
Nine Squares Pty Ltd
Defendant

[2014] SGCA 64

Sundaresh Menon CJ

,

Chao Hick Tin JA

and

Andrew Phang Boon Leong JA

Civil Appeal No 172 of 2013 and Summons No 2011 of 2014

Court of Appeal

Trusts—Beneficiaries

Trusts—Constructive trusts—Whether principal having beneficial ownership of benefit acquired by agent as result of his agency and in breach of his fiduciary duty

Trusts—Express trusts—Certainties—Whether clear evidence of intention to create trust could be inferred from surrounding circumstances and interpretation of agreements entered into

The appellants were members of a partnership (‘the Partnership’) that operated a well-known restaurant, bar and club in Bali (‘Ku De Ta Bali’). The respondent (‘Nine Squares’) was set up by one of the partners, Arthur Chondros (‘Chondros’). At the material times, it had two equal shareholders and directors, Chondros and Daniel Ellaway (‘Ellaway’). Of the many ‘Ku De Ta’ marks that were registered by Nine Squares, two of them were registered in Singapore by Nine Squares. The 1st Singapore Mark was registered on 16 February 2004 and the 2nd Singapore Mark was registered on 30 June 2009 (collectively, ‘the Singapore Marks’).

Sometime in 2009, there was a breakdown in the relationship between Chondros and Ellaway. On 29 June 2009, Ellaway caused Nine Squares to enter into a licence agreement with one Chris Au (‘Au’), under which the 1st Singapore Mark was licenced for use by Au. Au assigned his rights under the licence agreement to Ku De Ta SG Pte Ltd (‘KDTSG’), which currently operates Ku De Ta Singapore. Chondros disputed Ellaway's right to cause Nine Squares to enter into such ventures. KDTSG and Au commenced legal proceedings in Australia against Nine Squares to seek a declaration that the licence agreement was valid (‘the Australian proceedings’). Certain positions were taken in those proceedings by Chondros and Nine Squares. The Australian proceedings were subsequently settled before trial and the licence agreement was affirmed by the parties.

The Partnership commenced an action against Nine Squares to seek a declaration that the Singapore Marks were held by Nine Squares on trust for the Partnership and should be transferred to it; alternatively, the Partnership contended that the registration of the Singapore Marks ought to be invalidated. Further, the Partnership sought an account of the profits made by Nine Squares from the use and/or the licensing of the use of the Singapore Marks. Nine Squares' defence was, in essence, that the Singapore Marks were beneficially owned by it and were not held on trust for the Partnership.

Held, allowing the appeal:

(1) The Partnership's application for leave to adduce new evidence was dismissed as it could not show that the evidence would have an important influence on the outcome of the proceedings or was credible: at [45] to [49] .

(2) Three certainties had to be present for the creation of an express trust: certainty of intention; certainty of subject matter; and certainty of the objects of the trust. In respect of the certainty of intention, there had to be clear evidence of an intention to create a trust and this could be inferred not only from the alleged settlor's words and conduct but also of the surrounding circumstances and the interpretation of any agreements that might have been entered into: at [51] and [58] .

(3) The e-mail memorandum dated 6 July 2007 (‘the E-mail Memorandum’) showed that the Partnership, rather than Nine Squares or Chondros alone, owned the right to decide on the use of the ‘Ku De Ta’ name in any future ventures, and that all the members of the Partnership had an entitlement to benefit from any arrangement that might be concluded to permit the licensing of the use of the ‘Ku De Ta’ name. This was the point at which the issue of the beneficial ownership of the overseas ‘Ku De Ta’ marks (including the Singapore Marks) crystallised among the founders of the Partnership. Chondros did not respond to object to the position set out in the E-mail Memorandum while Ellaway in fact seemed to acquiesce in it. In fact, the latter was careful not to challenge the other founders' position on ownership of the ‘Ku De Ta’ name: at [81] , [90] and [91] .

(4) In the Australian proceedings, Chondros' affidavit and Nine Squares' defence expressly stated that the overseas marks were registered by Nine Squares in its name, but were held on trust of the Partnership as a whole; and further, that all the members of the Partnership were entitled to the benefits flowing from the use of those marks. This was consistent with the position taken by the other founders in the E-mail Memorandum in respect of licensing the use of the ‘Ku De Ta’ name. This court was being asked, by Nine Squares, to ignore the fact that if the Australian proceedings had not been settled and if Chondros' testimony in those proceedings had been accepted, Nine Squares' defence in the present proceedings would have been severely compromised, if not altogether doomed. Chondros' explanation for the position taken by him and Nine Squares in the Australian proceedings was also not credible: at [100] , [102] and [107] .

(5) Letters sent by Chondros' solicitor in the lead up to the commencement of the Australian proceedings further evidenced the point that Chondros viewed all the members of the Partnership as fellow beneficial owners of the 1st Singapore Mark. Chondros could not give a proper explanation for this. Chondros also took the step to ask a member of the Partnership to dispute the opening of Ku De Ta Singapore: at [111] to [113] .

(6) Chondros' affidavit in the Australian proceedings, together with Nine Squares' defence therein and the related evidence discussed above, showed that Chondros had in fact always viewed and understood the right to use the ‘Ku De Ta’ name as belonging to the Partnership as a whole and not just to him alone, and that as a result, he had always intended the Singapore Marks to be held on trust by Nine Squares for all the members of the Partnership. His efforts in the present proceedings to explain away what he had said in his affidavit in the Australian proceedings as well as the other pieces of evidence discussed above were not consistent with the objective evidence: at [115] .

(7) While the evidence for the period up to 2007 could be said to be equivocal and inconclusive, the cumulative effect of the evidence of the events from mid-2007 onwards - when the other founders (the other members of the Partnership apart from Chondros at that time) first became aware of the steps that had been taken to register the Overseas Marks - until the time the present disputes broke out was to lead inexorably to the conclusion that in causing Nine Squares to register the Overseas Marks in its name, Chondros intended Nine Squares to hold (at least) the Singapore Marks on trust for the Partnership as a whole. Any exploitation of the Singapore Marks, such as through licensing, would thus also have been for the benefit of all the members of the Partnership, and the profits derived from such exploitation would have been held on trust for all of them by Nine Squares: at [120] .

(8) An institutional constructive trust arose by operation of law. The basis for arguing that an institutional constructive trust should be imposed in the present circumstances was more specific and arose in a class of its own - namely, where there had been an abuse of a fiduciary position. The principle underlying the imposition of an institutional constructive trust in these circumstances was that a person had to not use his position to gain a benefit for himself when he owed obligations of the utmost good faith and loyalty to another: at [126] .

(9) The equitable rule was that an agent was to be treated as having acquired the benefit on behalf of his principal such that it was beneficially owned by the principal. In such cases, the principal had a proprietary remedy in addition to his personal remedy against the agent, and the principal could elect between the tworemedies. The equitable rule applied to all unauthorised benefits which an agent received. This was justified on the basis that equity did not permit an agent to rely on his own wrong to retain a benefit: as the agent acquired the benefit in question as a result of his agency and in breach of his fiduciary duty, he would be taken to have acquired that benefit for his principal. Thus, any benefit acquired by an agent in the course of his agency and in breach of his fiduciary duty would be held on trust for his principal; and in all cases where an agent was obliged to account for any benefit received in breach of his fiduciary duty, his principal could also claim the beneficial ownership of the benefit: at [129] and [130] .

(10) Under Victorian law, the legal test to determine whether Chondros had breached his fiduciary duty in such a manner was whether he, as the alleged usurper, had taken a corporate opportunity which there was a ‘real or substantial possibility’ of the Partnership pursuing, having regard to its existing business activities and its stated aspirations. It was not necessary to base the finding of a real or substantial possibility of the Partnership signing a licensing agreement for the use of the ‘Ku De Ta’ name on the circumstances prevailing at the time of the registration of the Singapore Marks. The passage of a distinct period of time between the registration of these marks and the signing of a licensing agreement would not preclude the finding of such a real or substantial possibility so long as the registration at the earlier date could be regarded as a preparatory step that was taken in contemplation of the Partnership pursuing a future corporate opportunity: at [133] and [138] .

(11) The real question, therefore, was whether there was a real or substantial possibility that the Partnership as a...

To continue reading

Request your trial
27 cases
3 books & journal articles
  • UNAUTHORISED FIDUCIARY GAINS AND THE CONSTRUCTIVE TRUST
    • Singapore
    • Singapore Academy of Law Journal No. 2016, December 2016
    • 1 December 2016
    ...8 J Eq 1 at 25–30. 4Wee Chiaw Sek Anna v Ng Li-Ann Genevieve[2013] 3 SLR 801. 5 This was hinted at in Guy Neale v Nine Squares Pty Ltd[2015] 1 SLR 1097. 6 See paras 3–10 below. 7 See paras 11–29 below. 8 See paras 30–56 below. 9 See cases cited in FHR European Ventures LLP v Cedar Capital P......
  • NAVIGATING THE MAZE
    • Singapore
    • Singapore Academy of Law Journal No. 2016, December 2016
    • 1 December 2016
    ...by the Singapore Court of Appeal in Thahir Kartika Ratna v PT Pertambangan Minyak dan Gas Bumi Negara (Pertamina)[1994] 3 SLR(R) 312. 42[2015] 1 SLR 1097 at [130]. Singapore law presently recognises a remedial constructive trust, see a general discussion in Man Yip, “Singapore's Remedial Co......
  • TRADE MARKS, TERRITORIALITY AND TRUSTS
    • Singapore
    • Singapore Academy of Law Journal No. 2016, December 2016
    • 1 December 2016
    ...Note An Uncomfortable Trinity Guy Neale v Nine Squares Pty Ltd [2015] 1 SLR 1097 The recent December 2014 decision of Guy Neale v Nine Squares Pty Ltd by Singapore's highest court, the Court of Appeal, concerned trade marks that had been registered in Indonesia and Singapore. The governin......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT