Kiri Industries Ltd v DyStar Global Holdings (Singapore) Pte Ltd

JurisdictionSingapore
CourtCourt of Three Judges (Singapore)
JudgeJudith Prakash JA,Robert French IJ,Bernard Rix IJ
Judgment Date19 October 2020
Docket NumberCivil Appeals Nos 16 and 48 of 2020
Date19 October 2020

[2020] SGCA(I) 5

Court of Appeal

Judith Prakash JA, Robert French IJ and Sir Bernard Rix IJ

Civil Appeals Nos 16 and 48 of 2020

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

Dhillon Dinesh Singh, Lim Dao Kai, Margaret Joan Ling Wei Wei, Teh Shi YingandDhivya Rajendra Naidu (Allen & Gledhill LLP) for the appellants;

Yim Wing Kuen Jimmy SC, Lee Song Yan, KevinandEunice Lau Guan Ting (Drew & Napier LLC) for the respondent.

Case(s) referred to

Davies v Powell Duffryn Associated Collieries, Ltd [1942] AC 601 (refd)

DyStar Global Holdings (Singapore) Pte Ltd v Kiri Industries Ltd [2018] 5 SLR 1 (refd)

MFM Restaurants Pte Ltd v Fish & Co Restaurants Pte Ltd [2011] 1 SLR 150 (folld)

Robertson Quay Investment Pte Ltd v Steen Consultants Pte Ltd [2008] 2 SLR(R) 623; [2008] 2 SLR 623 (folld)

Senda International Capital Ltd v Kiri Industries Ltd [2019] 2 SLR 1 (refd)

Tan Boon Heng v Lau Pang Cheng David [2013] 4 SLR 718 (refd)

Damages — Assessment — Minority shareholder soliciting business away from joint venture in breach of non-competition and non-solicitation clauses — Whether fall in sales caused by breach — Whether method of assessment arbitrary

Facts

The respondent, DyStar, was a joint venture formed between the first appellant, Kiri, and another dye manufacturer. Under the joint venture agreement (“the SSSA”), Kiri had agreed to non-competition and non-solicitation obligations. Following a trial on liability, the appellants were found to have breached their contractual obligations by soliciting business away from the respondent in respect of a single customer, FOTL. On appeal from the trial court's decision on liability, the Court of Appeal held that Kiri had also breached those provisions in respect of two other customers, Brandix and Hayleys. The matter then proceeded for the assessment of damages by the trial court.

The trial court found that the appellant's breaches had caused the respondent loss, and awarded damages for loss of margin in respect of FOTL and Brandix, and damages for loss of sales in respect of Hayleys. In particular, where Hayleys was concerned, the trial court awarded damages to DyStar based on loss of sales for the period 2012 to 2018, at the level of DyStar's sales figures in 2009 with a discount of 25%. The appellants appealed against the trial court's assessment of damages in respect of Hayleys.

Held, allowing the appeal:

(1) The court did not accept the appellants' submission that Kiri was selling into a different, lower quality market rather than being in competition with DyStar and that therefore there was no causation of DyStar's loss. The trial court had found that, whatever Hayleys' interest in lower quality dyes, its continued interest in higher quality dyes was shown by the fact that it obtained assurances from Kiri that its Kirazol dyes were “identical plug-ins” and were of high quality. There was no reason to disagree with this conclusion. DyStar's collapse in sales from 2013 to 2016 and its subsequent recovery in 2017 to 2018, as Kiri's competition waned and then ceased in the face of these proceedings, strongly supported the conclusion that Kiri's competition had some causal effect on DyStar's sales: at [18] and [19].

(2) The more difficult question concerned the assessment of DyStar's loss. The law did not require anything approaching certainty or precision in such matters. The assessment of quantum by a trial court should not be rejected or changed by an appellate court in the absence of substantial grounds and a significant difference in outcome, or unless it was clear that the trial court had gone seriously wrong or substantially astray, or had erred in or lacked sufficient rationality: at [20] and [21].

(3) The trial court, in adopting 2009 as a base year, had good reason not to accept DyStar's suggestion of a 100% to 120% level of sales for the succeeding years. However, the trial court did not explain its adoption of a 25% discount. An average discount of 25% on the 2009 level of sales over the years 2012 to 2018 appeared to be too generous to DyStar, especially considering that DyStar's actual sales in 2018 after the elimination of Kiri's competition was a mere fraction of its 2009 sales levels: at [22], [24] and [26].

(4) There was no special reason why 2009 should be favoured as a base year for the assessment of DyStar's lost sales. As for whether the discount of 25% was well founded, this could be tested against the sales figures from three data points: the first year of Kiri's competition (2012), the first year after the competition had ceased (2018), and the year immediately before Kiri's competition started (2011). On an average of the three tests based on these data points, the average base line sales that could have been achieved by DyStar was the equivalent of the 2009 sales with a discount of 53%: at [43] to [47].

(5) The trial court's base line of 2009 with a discount of 25% was arbitrary and ultimately did not withstand scrutiny. Rather, 2011 was the more appropriate base year as it came close to the average of the three tests considered, with an appropriate allowance in favour of DyStar on the assumption that its uncharacteristically poor sales in one category of dye in 2011 could have been influenced by external factors: at [48].

19 October 2020

Judgment reserved.

Sir Bernard Rix IJ:

1 In this long-running saga between two dye manufacturers who had formed a joint venture, Kiri Industries Ltd 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.

2 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”).

3 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 cll 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.

4 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).

5 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%.

6 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.

7 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...

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