Kiri Industries Ltd and another v DyStar Global Holdings (Singapore) Pte Ltd and another appeal

• Judge: Judith Prakash JA
• Judgment Date: 19 October 2020
• Neutral Citation: [2020] SGCA(I) 5
• Citation: [2020] SGCA(I) 5
• Defendant Counsel: Yim Wing Kuen Jimmy, SC, Lee Song Yan, Kevin and Eunice Lau Guan Ting (Drew & Napier LLC)
• Published date: 22 October 2020
• Hearing Date: 14 September 2020
• Plaintiff Counsel: Dhillon Dinesh Singh, Lim Dao Kai, Margaret Joan Ling Wei Wei, Teh Shi Ying and Dhivya Rajendra Naidu (Allen & Gledhill LLP)
• Date: 19 October 2020
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeals Nos 16 of 2020 and 48 of 2020
• Subject Matter: Damages,Assessment

Bernard Rix IJ:

In this long-running saga between two dye manufacturers who had formed a joint venture, Kiri Industries Limited and its principal, Mr Manishkumar Kiri, appeal against the assessment of damages and award of costs made against them in the Singapore International Commercial Court by two judgments of Kannan Ramesh J, Roger Giles IJ and Anselmo Reyes IJ respectively dated 9 January 2020 (DyStar Global Holdings (Singapore) Pte Ltd v Kiri Industries Ltd [2020] 3 SLR 42 (“the assessment judgment”)) and 3 March 2020 (DyStar Global Holdings (Singapore) Pte Ltd v Kiri Industries Ltd and others [2020] 4 SLR 28 (“the costs judgment”)). Roger Giles IJ delivered both the assessment and the costs judgments of the trial court.

We shall call the appellants Kiri and Manish, as earlier judgments have also done, and the respondent, DyStar Global Holdings (Singapore) Pte Ltd, DyStar. We adopt in general the acronyms and other terms defined in DyStar Global Holdings (Singapore) Pte Ltd v Kiri Industries Ltd and others and another suit [2018] 5 SLR 1 (“the liability judgment”).

DyStar is the joint venture company formed by Kiri and WPL/Senda. Under the joint venture agreement (“the SSSA”), Kiri had agreed to non-competition and non-solicitation obligations in the SSSA’s clauses 15.1(a) and 15.1(b). In the liability judgment, the trial court held that Kiri had breached these clauses in respect of a single customer, FOTL. On appeal, in Senda International Capital Ltd v Kiri Industries Ltd and others and another appeal [2019] 2 SLR 1, we held that Kiri had breached those provisions also in respect of two other customers, Brandix and Hayleys. In the event, damages had to be assessed against Kiri and Manish in respect of those three customers. That was done in the assessment judgment below.

There is no appeal against the assessment judgment’s findings and award in respect of FOTL and Brandix. As for FOTL, the trial court found that Kiri’s competition had caused DyStar to suffer loss of margin (but not of sales) up to March 2016, but that thereafter the competition had ceased and it was FOTL’s false allegations of continued competition from Kiri that had caused DyStar for a while to maintain lower prices. As for Brandix, DyStar’s claim was again based on loss of margin, not of sales, but in this case to be measured by restraint on the ability to increase prices (from September 2013) as distinct from pressure to reduce prices (as in FOTL’s case). The trial court found that DyStar had proved only a loss of ability to raise prices by 10% and only in 2014 (thereafter it was Brandix’s own business decline and failure which had prevailed).

On the other hand, Kiri and Manish appeal against the trial court’s findings in relation to Hayleys. The essence of those findings is that Kiri’s competition caused loss of sales (but not of margin) during the period of 2012–2018 and that that loss was to be assessed in the round, across the years and across three different categories of product, by reference to DyStar’s sales in 2009 discounted by 25%.

In this court, Kiri and Manish submit primarily that there was no causation of loss at all, so that damages should be merely nominal. That submission is founded on the contention that Kiri was competing in lower quality commodity dyes which were in a different market segment from DyStar’s higher quality dyes, and that Kiri’s competition was therefore really aimed not at DyStar’s products at all, but at those of another lower quality producer and seller to Hayleys, called Jay Chemicals (“Jay”). Essentially, Kiri’s case at trial (and before this court) was that DyStar had failed to prove any loss. This was an “all or nothing” submission.

However, Kiri and Manish did before the trial court have a fall-back position on assessment of quantum, as distinct from causation, by reference to DyStar’s case that its loss was to be assessed by reference to DyStar’s own sales in 2009 (plus, as DyStar submitted, 10% to 20% more). Kiri attacked that case on the basis that 2009 was an inappropriate year to take as a basis for the alleged loss of sales, since it was three years before the start of the competition complained of, at a period when DyStar’s sales were on a continuous declining trend year on year. Kiri and Manish therefore submitted that any use of 2009 as a base line was arbitrary and, since that was DyStar’s only case, that on that basis too Dystar could prove no loss. In this court, Kiri and Manish repeat the submission that the choice of 2009 was arbitrary, and add the further submission that the trial court’s discount on the 2009 figures of 25% was also arbitrary, unreasoned and out of line with the general statistics. However, fearful perhaps of undermining its primary submission of no causation, Kiri and Manish were reluctant themselves to advance (in the absence of any alternative case from DyStar) any particular fall-back position.

That is the structure of the appeal. The statistics of Kiri’s and DyStar’s sales are vital to an understanding of the issues. We set them out immediately below, after which we will turn first to the primary issue of causation.

The statistics

The statistics of Kiri’s and DyStar’s sales to Hayleys across three matched categories of dyes, namely (i) Kiri’s Kirazol KX and DyStar’s Remazol RGB, (ii) Kiri’s Kirazol Other Colours and DyStar’s Remazol Other Colours, and (iii) Kiri’s Kirazol Black and DyStar’s Remazol Black, are set out below in Table A (Kiri’s Sales to Hayleys) and Table B (DyStar’s Sales to Hayleys). They are taken from the judgment below (see the assessment judgment at [46] and [47]): TABLE A

Kiri’s sale of Kirazol to Hayleys
Year	Kirazol KX (kg)	Kirazol Other Colours (kg)	Kirazol Black (kg)	Total (kg)
2012	3,700	300	12,250	16,250
2013	27,750	2,725	76,100	87,175
2014	25,300	4,750	108,900	138,950
2015	26,200	5,150	35,800	67,150
2016	32,715	2,400	37,050	72,165
2017	21,550	500	2,000	24,050
2018	-	-	1,000	1,000

TABLE B

DyStar’s sale of Remazol to Hayleys
Year	Remazol RGB (kg)	Remazol Other Colours (kg)	Remazol Black (kg)	Total (kg)
2007	15,275	4,500	75,950	95,725
2008	21,325	3,050	61,500	85,875
2009	18,350	6,775	23,600	48,725
2010	20,800	1,500	5,000	27,300
2011	6,525	1,740	11,000	19,265
2012	4,400	3,400	6,350	14,150
2013	50	1,225	50	1,325
2014	-	-	-	-
2015	-	50	-	50
2016	75	100	-	175
2017	14,575	850	-	15,425
2018	16,775	1,025	-	17,800

A number of matters will be apparent from study of these figures.

First, DyStar’s sales to Hayleys (see Table B above) were in continuous and steep decline from 2007 to 2011, that is to say over the five years prior to Kiri’s entry on the scene in 2012. Kiri’s first contact was in early March 2012, and it accepted its first order from Hayleys in May 2012. That decline was not continuous in the same way for each of the three categories of dye, but it was general and pronounced, and can be seen in the “Total” column which declines, in kilograms, from 95,725 to 85,875, to 48,725, to 27,300 and then to 19,265.

Secondly, Kiri’s sales only begin in 2012 and they are tailing off significantly in 2017 and have all but gone in 2018 (a possibly single delivery of Kirazol Black of 1,000 kg). The decline in 2017 (and essential elimination in 2018) is said to be connected with the complaint in this litigation of breach of clause 15 of the SSSA, which makes sense.

Thirdly, although DyStar’s sales to Hayleys in 2012 may be said to be in line with the pre-existing trend of 2007–2011, in 2013–2016 they suffer an almost complete collapse, followed by a recovery in 2017 and 2018 as Kiri’s sales fade and end. However, that recovery, even in 2018, does not reach anything close to the 2009 levels.

Fourthly, these considerations prima facie give force to DyStar’s complaint, and the trial court’s finding, that Kiri’s competition caused loss of sales to DyStar. Thus DyStar’s sales fall as that competition intensifies, and then rise again as that competition wanes and ceases.

Fifthly, however, Kiri’s sale figures are somewhat disconnected from DyStar’s. Thus Kiri’s great success in 2013–2016 is out of all comparison with DyStar’s previous sales in 2009–2011 and subsequent sales in 2017–2018. This lends force to Kiri’s submission and the trial court’s acceptance that Kiri’s success was at least partly (Kiri would say mainly) driven by selling lower quality product at lower prices in competition with third party sellers such as Jay, rather than DyStar. Thus the assessment judgment accepts that Hayleys were obtaining supplies from elsewhere (at [57]) and that “if Kiri had not been in the market, [Hayleys] would likely have also turned to obtaining supplies of dyes from another supplier, as it appears to have done even while obtaining dyes from Kiri” (at [58]).

Causation

It is against this background that, first of all, the appellants’ primary argument of no causation needs to be evaluated.

On behalf of Kiri and Manish, Mr Dhillon submitted that there was simply no connection between Kiri’s sales and DyStar’s sales. Kiri was selling into a different, lower quality market, competing with Jay, not with Dystar. Mr Dhillon took our attention to an email dated 7 March 2011 from Hayleys’ associated company and a distributor of dyes, Haycolour (Private) Ltd (“Haycolour”), to Kiri, where mention was made of “a big switch to Jakasol Brand mainly due to price advantage” – Jakasol was the brand name of Jay –...