Haco Far East Pte Ltd v Ong Heh Lai Francis

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 24 November 1999
• Neutral Citation: [1999] SGCA 84
• Date: 24 November 1999
• Subject Matter: Whether precludes declaratory relief,Cause of action estoppel,Commencing action by originating summons,Res Judicata,O 28 r 8 Rules of Court,Whether court should direct proceedings to continue as if begun by writ,Originating processes,Whether action should be commenced by writ,Principle of issue estoppel or cause of action estoppel,Civil Procedure,Issue estoppel
• Docket Number: Civil Appeal No 99 of 1999
• Published date: 19 September 2003
• Defendant Counsel: P Suppiah and Elengovan Krishnan (P Suppiah & Partners)
• Court: Court of Appeal (Singapore)
• Plaintiff Counsel: S Surenthiraraj and Elaine Tay (Harry Elias & Partners)

(delivering the grounds of decision of the court): This was an appeal against a decision of Choo Han Teck JC dismissing the appellant`s (Haco`s) originating summons (OS 332 of 1999) which sought certain declarations and incidental reliefs. We heard the appeal and affirmed the decision of the court below. As the reasons for our decision did not quite coincide with those of the court below, we have prepared these written grounds.

The background

The circumstances giving rise to the institution of this originating summons (`OS`) were straightforward. The appellant was incorporated in 1984 with two shareholders, Haco NV, a Belgian company and the respondent (Ong), and they held 69% and 31% respectively in the ordinary share capital of Haco. There were two directors in Haco, Ong and Mr Roger Havegoer, the Chief Executive of Haco NV. Ong became the managing director of Haco sometime in March 1984 pursuant to a contract of employment signed by Haco and Ong on or about 24 March 1984. Clause 13 of the contract provided that:

If any dishonesty appears from one of the shareholders, his share will automatically be transferred to the other shareholders.

In early 1993 Haco NV became aware of some irregularities in Ong`s management of Haco. In 1994, Haco brought an action (Suit 403/94) against Ong for breach of fiduciary duty, alleging that while holding the office of managing director, he had carried on his own business in competition with Haco, and also made use of Haco`s office facilities for the purpose of his business. That action did not concern the contract of employment. At the conclusion of the trial, Judith Prakash J entered interlocutory judgment in favour of Haco and ordered damages to be assessed. In the concluding part of her written grounds of decision (at [para ] 83) she made the following statement:

The defendant [Ong] had clearly acted in breach of his fiduciary duty and dishonestly ...

On 23 December 1998, Haco`s solicitors wrote to Ong requesting that he transfer his shares in Haco to Haco NV, pursuant to cl 13 of the contract of employment. Ong refused to comply.

Therefore, on 5 March 1999, Haco instituted the present OS and claimed (after amendments), inter alia, for the following reliefs:

1 a declaration that, based on the court`s findings in Suit 403/94, the defendant had acted dishonestly whilst an employee of Haco Far East Pte Ltd (prayer 1);

2 a declaration that accordingly, under cl 13 of the contract of employment between the defendant and Haco, the defendant`s shares in Haco are to be transferred to the other shareholder, Haco NV (prayer 2).

Decision below

The court below dealt only with the first two prayers set out above as the other prayers were essentially consequential. The judge dismissed prayer 1 on the ground that it was res judicata by reason of issue estoppel. He noted that in the earlier action (S 403/94) before Prakash J for breach of fiduciary duty, Haco had relied on various allegations of dishonesty against Ong, which allegations had subsequently been proven, and upon which judgment was pronounced. He felt that Haco was therefore estopped from seeking that same declaration because it was `an issue which had been determined by a court of competent jurisdiction in previous litigation between the same parties.` Furthermore, a party ought not to be granted multiple declarations that a person was dishonest when the grounds for making that finding arose from the same set of facts; that would be duplicitous, amounting to an abuse of the process of the court.

In respect of prayer 2, the judge was of the opinion that Haco had commenced the action by the wrong procedure. He felt that as Ong was disputing that what he did fell within the purview of cl 13, the action should have been commenced by way of a writ where Haco should plead the contract of employment, the judgment and findings in the earlier suit, the demand for the transfer of shares made pursuant to the judgment, the respondent`s failure to comply, and a prayer that the respondent be compelled to transfer the said shares. Haco could then proceed by way of summary judgment. He thus dismissed the OS.

Issues

Before us Haco advanced two main arguments. The first was that the principle of issue estoppel did not apply in the circumstances of this case. Secondly, even if OS was not the correct procedure, instead of dismissal, appropriate directions should have been given by the court under O 28 r 8 of the Rules of Court. We will consider each of these arguments...