Leiman, Ricardo and another v Noble Resources Ltd and another

• Judge: George Wei J
• Judgment Date: 26 July 2018
• Neutral Citation: [2018] SGHC 166
• Citation: [2018] SGHC 166
• Court: High Court (Singapore)
• Published date: 01 August 2018
• Docket Number: Suit No 393 of 2012
• Plaintiff Counsel: Andre Francis Maniam SC, Liew Yik Wee, Sim Mei Ling, Joel Quek and Jeremy Tan (WongPartnership LLP)
• Defendant Counsel: Davinder Singh SC, Jaikanth Shankar, Tan Ruoyu and Srruthi Ilankathir (Drew & Napier LLC, instructed) and Kenetth Pereira and Jeremy Bay (Aldgate Chambers LLC)
• Subject Matter: Contract,Contractual terms,Implied terms,Discretionary power,Privity of contract,Common law,Damages,Liquidated damages or penalty,Employment Law,Employees' duties,Good faith and fidelity,Employers' duties,Tort,Conspiracy,Inducement of breach of contract,Unlawful interference
• Hearing Date: 27 July 2017,05 July 2017,24 July 2017,25 July 2017,28 July 2017,04 November 2017,18 July 2017,07 July 2017,13 July 2017,03 August 2017,04 August 2017,04 July 2017,26 July 2017,21 July 2017,12 July 2017,19 July 2017,14 July 2017,06 July 2017,20 July 2017

George Wei J: Introduction

At the heart of this action lies a claim by the 1st plaintiff, Mr Ricardo Leiman (“Mr Leiman”), for his entitlements under a contract of employment with the 1st defendant, Noble Resources Ltd (“NRL”), and under which he served in top-level executive positions at the 2nd defendant, Noble Group Limited (“NGL”). The entitlements by and large concern shares and share options in NGL awarded to Mr Leiman and placed into a family trust administered by the 2nd plaintiff, Rothschild Trust Guernsey Limited (“Rothschild Trust”), as trustee.

Broadly, Mr Leiman asserts that his entitlements were wrongfully forfeited or withdrawn after his resignation in end-2011. The defendants deny this assertion and claim that they were entitled to forfeit/withdraw the entitlements on account of various breaches of contract. These breaches basically revolve around the assertion that Mr Leiman was not a “good leaver” and because of non-disclosure of certain information, he was aware of relating to events occurring before and during his years of service.

Facts Dramatis personae

Mr Leiman, a Dutch national, was employed by NRL on 31 March 2006 to serve as the Chief Operating Officer (“COO”) of NGL. On 1 January 2010, he became the Chief Executive Officer (“CEO”) of NGL.¹ The terms of his employment were contained in an employment agreement dated 6 December 2005 (“the Employment Agreement”).² In addition, Mr Leiman was appointed as an Executive Director of NGL in April 2009, a position which he retained until 1 December 2011.³

In short, over the five and half years Mr Leiman was employed at NGL, he served three and a half years as COO followed by two years as CEO. He was also an Executive Director for about two and a half years.

NRL and NGL are part of the Noble Group (which I shall generally refer to as “Noble”), a supply chain manager of energy, gas and power products, metals and minerals in over 140 countries. NGL is a Bermuda-incorporated company listed on the Singapore Exchange. NRL is a principal subsidiary of NGL incorporated in Hong Kong.⁴

Mr Richard Samuel Elman (“Mr Elman”) is the founder of NGL and served as its Chairman until he took on the role of Chairman Emeritus in 2017.⁵ Mr Jeffrey Mark Alam (“Mr Alam”) is the Group General Counsel of NGL and a director of NRL.⁶

During Mr Leiman’s employment, he was given shares and share options in NGL as part of his remuneration, and was paid an annual discretionary bonus. The share options were issued pursuant to rules contained in the Noble Group Share Option Scheme 2004 (“the Share Option Rules”), whereas the shares were issued pursuant to Noble’s Annual Incentive Plan (revised 10 September 2008) (“the AIP”). Mr Leiman assigned most of his shares and share options to a trust known as the Adelaide Trust. The stated purpose of the Adelaide Trust is to benefit Mr Leiman’s family and to fund charitable ventures.⁷ Rothschild Trust is the current trustee of the Adelaide Trust.⁸

The award of benefits such as bonuses, shares and share options was determined by NGL’s Remuneration and Options Committee (“the R&O Committee”). At the material time, circa 2012, the R&O Committee comprised Mr Elman, Mr Edward Walter Rubin (“Mr Rubin”) and Mr Robert Chan Tze Leung (“Mr Chan”). Mr Rubin and Mr Chan were independent directors of NGL at the time.⁹ I note that Mr Leiman had also served on the R&O Committee prior to his resignation and would have been familiar and well-acquainted with the R&O Committee’s procedures.

I further note that whilst Mr Leiman was formally employed by NRL, for all practical purposes, his remuneration and entitlements to shares and share options were determined by the R&O Committee of NGL.

The terms of Mr Leiman’s employment contract

Mr Leiman’s contract with NRL is set out in a letter dated 6 December 2005 on NRL’s letterhead and signed by Mr Elman as a director of NRL.¹⁰

The letter states that the agreement “contains the whole agreement” between Mr Leiman and NRL, and that Mr Leiman agreed to comply with Noble’s “policies and procedures as issued and/or amended from time to time.”

The principal terms of the employment contract as relevant to the dispute are, in brief terms, as follows: Clause 1: Appointment and Reporting. This provides that Mr Leiman (as COO) would report to and be subject to the direction of Mr Elman in the latter’s capacity as CEO. Clause 2: Remuneration. This provides for an annual salary of US$350,000, which was subsequently increased to US$750,000 with effect from 1 April 2008.¹¹ Clause 3: Annual Performance Review. This provides that any salary increase, bonus, stock option grant or promotion will “be determined at the absolute discretion of [NRL]’s management and the frequency of such reviews will be subject to [NRL]’s guidelines.” Clause 6: Confidential Information. This provides that Mr Leiman is not to disclose or make accessible to any other person, without the prior written consent of NRL, any confidential information of NRL, and related and affiliated companies. Confidential information is defined to include trade secrets and non-public information concerning financial data, business plans, product and/or services development, client lists, supplier lists, marketing plans and employee lists. Clause 7: Non-Competition Requirements. This clause contains various prohibitions and restraints against engagement in competition. Clause 7 was to apply during the duration of the employment and for a period of six months post-termination. The geographical scope of cl 7 is limited to “the Asia-Pacific and Americas Regions”. Among other things, cl 7 prohibits Mr Leiman from competing, whether directly or indirectly, as a director, officer, employee, independent contractor, advisor or otherwise, with the business of NRL or a related or affiliate company which he was involved in or had supervisory responsibility during the 12 months preceding his last day as an employee of NRL. Clause 7 also prohibits soliciting the patronage of any client or customer with whom Mr Leiman had personal contact or dealings on behalf of NRL or a related or affiliate company over the 12 months preceding his last day as an employee. A similar provision applies in respect of prohibiting Mr Leiman from employing or soliciting senior management of NRL or a related or affiliate company. Clause 8: Trading Policies. This clause prohibits trading in shares of Noble without the written consent of Noble’s CEO and the Group Legal Counsel. Clause 11: Termination. This provides, inter alia, that the agreement could be terminated on six months’ notice. It also provides that upon resignation from NRL, Mr Leiman would not be entitled to any further compensation, costs or damages resulting from such termination. Clause 12: Governing Law and Jurisdiction. This provides that the parties agreed for the agreement to be governed by the laws of Hong Kong and to submit to the non-exclusive jurisdiction of the courts of Hong Kong.

Overview of Mr Leiman’s employment history

Given the broad range and numerous issues raised, it is convenient to set out a brief overview of Mr Leiman’s background and his entry into Noble in 2005 before going into a more detailed discussion of the evidence.

Mr Leiman’s career has mostly been in what might be loosely referred to as commodity trading in the area of agricultural and related products and services. Previous companies he worked for include:¹² 1987 to 1989: Louis Dreyfus Corporation (“Louis Dreyfus”) as an export manager; 1989 to 1991: Continental Grain Co (“Continental Grain”) as a senior trader and import manager; 1991 to late 1999 or early 2000: Eximcoop SA (“Eximcoop”) as a senior trader, then General Manager for Europe, and finally international General Manager; early 2000 to 2002: Mr Leiman worked in the media industry; 2002 to 2005: Louis Dreyfus as COO for soft commodities; 2005 to 2009: NRL as COO for NGL; and 1 January 2010 to 1 December 2011: NRL as CEO of NGL.

It was when Mr Leiman joined Louis Dreyfus in 1987 that he first met a Mr Ferdinando Carlier (“Mr Carlier”) and a Mr Ozeias Silva de Oliveira (“Mr Ozeias”) (collectively, “Messrs Carlier and Ozeias”). At that time, they were senior to Mr Leiman.¹³ Shortly after Mr Leiman left Louis Dreyfus for Continental Grain, Messrs Carlier and Ozeias founded Eximcoop together with several Brazilian cooperatives.¹⁴ One year later in 1991, the three were reunited when Mr Leiman joined Eximcoop.

In 1998, shortly after the Asian Financial Crisis, Eximcoop ran into financial difficulties. As a result, negotiations commenced with the Itochu Group (“Itochu”), a potential investor from Japan. At or around the same time, serious problems arose in respect of a contract and bill of lading involving Continental Grain. These involved allegations of improper or irregular discharge and delivery of cargo without proper bills of lading and or shipping documents which could expose Eximcoop to an allegation of fraud. Whilst Mr Leiman does not appear to be directly involved in the shipment and bills of lading, it appears he was asked by Eximcoop to assist in resolving the problem.¹⁵

On 2 February 1999, Itochu purchased 51% of the shares in Eximcoop.¹⁶ In October 1999, Eximcoop was declared insolvent and Mr Ozeias was dismissed from Eximcoop. This was followed by the dismissal of Mr Carlier in December 1999 for mismanagement ¹⁷ I pause to note that Mr Carlier denies mismanagement and brought proceedings in Brazil against Eximcoop for wrongful dismissal.¹⁸

After their departures from Eximcoop, Messrs Carlier and Ozeias incorporated Agricole – Agricultura, Comercio, Logistica e Exportacao Ltda (“Agricole”), a grain trading company in Brazil.¹⁹ Agricole did work relating to the purchase and sale of soybeans and soymeal for a company called Alliance Grain Inc. Agricole’s contract with Alliance Grain...