Lim Seng Choon David v Global Maritime Holdings Ltd and another and another suit

JudgeChoo Han Teck J
Judgment Date01 February 2018
Neutral Citation[2018] SGHC 25
Citation[2018] SGHC 25
Defendant CounselAudrey Chiang Ju Hua and Nerissa Tan Yin Shi (Dentons Rodyk & Davidson LLP)
Published date21 November 2018
Hearing Date06 December 2017,01 November 2017,31 October 2017
Plaintiff CounselTwang Kern Zern and Lam Jianhao Mark (Central Chambers Law Corporation)
Date01 February 2018
CourtHigh Court (Singapore)
Docket NumberHC/Suit No 1236 of 2015 and HC/Suit No 239 of 2015
Subject MatterOral Agreement,Duties,Contract,Directors,Formation,Companies
Choo Han Teck J: Introduction

The two defendants are in the business of providing marine, offshore and engineering consultancy services. The second defendant (“the 2nd defendant”) in Suit 1236 of 2015 (“s 1236/2015”) is a wholly-owned subsidiary of the first defendant in s 1236/2015 (“the 1st defendant”). The plaintiff in s 1236/2015 (“the plaintiff”) was an employee of the 1st defendant and a director of the 2nd defendant.

Suit 239 of 2015 (“s 239/2015”) is the 2nd defendant’s counterclaim against the plaintiff. The plaintiff’s claim in s 239/2015 has been struck out and only the counterclaim (“the Counterclaim”) remains. The two suits have been consolidated. I deal first with the claim in s 1236/2015 (“the Claim”).

The Claim

On 24 November 2014, the plaintiff met with Mr Gary Anthony Hogg (“Mr Hogg”). Mr Hogg was a director of both defendants. At the meeting, the plaintiff was asked to retire early. The core of this action concerns what transpired at this meeting. According to the plaintiff, he made an oral agreement between himself and the defendants, who were represented by Mr Hogg (“the Oral Agreement”) at that meeting. The plaintiff alleges that the terms of the Oral Agreement are as follow: The plaintiff would waive the requirement of one month's calendar notice and his employment with the 1st Defendant would terminate with immediate effect; The 2nd defendant would pay to the plaintiff an aggregate sum for all of the plaintiff s unutilized holiday leave entitlement and "earned leaves" accumulated as at 24 November 2014, to be calculated subsequently based on leave records; The plaintiff would be paid the bonus accrued from the 2nd defendant for the year 2013; The plaintiff would transfer his shares in Global Maritime Group AS to an assignee identified by the defendants in consideration of payment for such shares calculated based on an open market value; The outstanding balance owed by the 2nd defendant to the plaintiff under a loan agreement for the sum of S$500,000.00 would be paid to the plaintiff; and The 2nd defendant would pay to the plaintiff six months' salary in consideration of the plaintiff agreeing to a six months’ non-competition period. The plaintiff’s claims for payment in lieu of unused holiday leave and “earned leaves” are based on the 2nd defendant’s alleged practice of allowing accumulation and “earning” of leave from year to year.

The defendants deny the Oral Agreement. They say that the negotiations between the plaintiff and Mr Hogg were subject to contract. They point out inconsistencies in the plaintiff’s account in relation to the terms of the alleged Oral Agreement and rely on the correspondence between the plaintiff and Mr Hogg after the meeting as well as a draft Separation Agreement and Share Purchase Agreement that were later circulated to the plaintiff to show that no binding agreement was arrived at during the meeting. The defendants also take the position that the plaintiff is employed by the 1st defendant and the obligations of the 1st defendant as the employer were at no time transferred to the 2nd defendant. So, even if the 2nd defendant did allow the unlimited accrual of unused holiday and payments in lieu of such unused holiday and “earned leaves”, these entitlements would not in any case apply to the plaintiff, who was an employee of the 1st defendant.

Relying on the Oral Agreement, the plaintiff claims against the 2nd defendant: $273,550 and $188,100 for unutilised holiday or leave entitlement and “earned leaves”; Bonus of $30,692 for the year 2013; $228,000 for six months’ of the plaintiff’s last drawn salary; and Interest on the said sums pursuant to s 12 of the Civil Law Act (Cap 43) against the 1st defendant and/or the 2nd defendant: An order that the 1st defendant and/or the 2nd defendant purchase the plaintiff’s shares in Global Maritime Group at the price of Norwegian Kroner 249,899.70; Interest on the said sum pursuant to s 12 of the Civil Law Act; and Costs

Decision for the Claim

To establish an oral agreement, there must be clear evidence that all parties to the alleged agreement intended to create legal obligations by their exchange of words and conduct. This does not seem to be the case here. It appears to me that what transpired on the morning of 24 November 2014 were mere negotiations between the plaintiff and Mr Hogg in relation to the plaintiff’s immediate retirement. I do not doubt that in discussing the plaintiff’s immediate departure, the parties may have discussed the possible compensation that the plaintiff could be entitled to. But this did not necessarily mean that there was an agreement between the parties to be bound by these negotiations.

It is important to show that the terms orally agreed to are consistent with contemporaneous documents. This does not mean that the oral agreement has to be evidenced by a written form of the terms. But contemporaneous documents showing that some agreement was reached can support the plaintiff’s claim. In this case, the plaintiff adduced an email in which he wrote to Mr Hogg stating that he was entitled to “all dues plus 6 months’ salary”. The email was sent the very afternoon of 24 November 2014. There was also a draft Separation Agreement sent to the plaintiff shortly after his departure. Both the documents suggest that the parties were still at the stage of negotiations. Pertinently, the email sent on the very afternoon of the 24 November 2014 did not contain very much detail. If indeed the parties agreed to the specific terms as pleaded by the plaintiff, one would have expected the plaintiff to say something about these terms in his email to Mr Hogg and to make reference to them as being agreed or settled. More crucially, the draft Separation Agreement was also silent on the terms as pleaded by the plaintiff.

On the plaintiff’s best case, only a compensation of six months’ salary was agreed to, since it was expressly mentioned in the email of 24 November 2014. But even then, I find that the parties were at cross-purposes and had no meeting of minds in relation to its basis. While the plaintiff had thought that the offer of six months’ salary was in consideration of his agreeing to a non-competition period of the same duration, the defendants intended for it to be a compensation for his early retirement and had expected the plaintiff to adhere by a non-competition period of 12 months, as indicated in the draft Separation Agreement.

I do not think that the parties themselves believed that an agreement was entered into on the morning of 24 November 2014. From the emails he sent, it seems to me that plaintiff himself believed that negotiations were still ongoing. When asked during trial, the plaintiff candidly agreed that he was telling Mr Hogg what he had wanted in exchange for retirement in his email of 20 January 2015. He did not say that those terms had been agreed upon during the meeting on 24 November 2014. Judging by the language of both Mr Hogg and the plaintiff, I agree with the defendants that neither of them acted like parties who believed that a binding agreement existed in relation to the plaintiff’s compensation package for early retirement. Moreover, the very act of sending the draft Separation Agreement and the draft Sale and Purchase Agreement for the shares suggest that the defendants intended for those to govern the terms on which the plaintiff would retire from the company. It is clear to me that neither of the parties saw themselves as having agreed to the terms of the plaintiff’s early retirement at the meeting on 24 November 2014.

In any case, an oral agreement must contain terms that are clear enough to be enforced. The terms, alleged by the plaintiff, were neither certain nor clear. As mentioned, the parties had different understanding as to the plaintiff’s obligations in relation to the six months’ compensation. Although the plaintiff thought that he would be restricted by a six-month non-compete clause, the defendants had assumed that the six months’ compensation was in exchange for the one month notice period and for the plaintiff to leave amicably. The defendants also intended for the non-competition period to be 12 months’ long, as seen from the draft Separation Agreement. The alleged terms in relation to the unutilized and “earned” leave payments were also disputed. I found it difficult to believe that a multinational company would allow its employees to accrue leave in an unlimited fashion and would agree to compensate them for unutilized leave, including those accrued over the years, by way of an oral agreement. This is especially if the compensation could accumulate to a six-figure sum (as in the plaintiff’s case) or more. The plaintiff contends that this was allowed. When questioned as to who started or authorised this practice, the plaintiff conceded that it was himself, but claimed that his superior, Mr Jan Vatsvaag (“Mr Vatsvaag”) had agreed to it. Mr Vatsvaag was not called to testify. Without evidence to support his claim, a bare declaration by the plaintiff that he himself allowed such a practice is unhelpful. At the very least, I would expect the defendants to satisfy themselves of the quantum payable before agreeing to pay them. Moreover, even the plaintiff himself agreed that the quantum allegedly owed to him was not known to either party as of the meeting on 24 November 2014. I am unable to see how the parties could be said to have agreed to terms so unclear and uncertain.

For the reasons above, I find there to be no oral agreement between the parties and the plaintiff’s claim is dismissed.

The Counterclaim

The 2nd defendant counterclaims against the plaintiff for the breach of duties that he owed as a director. These include, inter alia, making trips to Hong Kong and China at the 2nd defendant’s expense although the 2nd defendant had no business operations in Hong Kong...

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