MFM Restaurants Pte Ltd and another v Fish & Co Restaurants Pte Ltd and another appeal

• Jurisdiction: Singapore
• Court: Court of Appeal (Singapore)
• Judge: Chao Hick Tin JA
• Judgment Date: 18 October 2010
• Neutral Citation: [2010] SGCA 36
• Citation: [2010] SGCA 36
• Defendant Counsel: Tony Yeo Soo Mong and Rozalynne Asmali (Drew & Napier LLC)
• Published date: 05 January 2011
• Plaintiff Counsel: Lau Kok Keng and Wendy Low Wei Ling (Rajah & Tann LLP)
• Hearing Date: 20 May 2010
• Docket Number: Civil Appeals Nos 169 and 171 of 2009
• Date: 18 October 2010
• Subject Matter: Damages,Contract

Andrew Phang Boon Leong JA (delivering the judgment of the court): Introduction

The assessment of damages is almost always of the first importance to plaintiffs (including the plaintiff in the present proceedings). This is only natural given that a plaintiff who has been legally wronged would surely want to know how the wrong (or wrongs) is (or are) to be redressed (often, as is the case here, in monetary terms). It has also commonly been said – quite correctly, in our view – that the assessment of damages is not a mechanistic process. To be sure, there are legal rules and principles which guide the court. However, their application is often not an easy process. As we shall see, this is in fact precisely the situation in the present proceedings. There have been clear – and continuing – breaches on the part of the defendants (who are the appellants in both the appeals before us (“the Appellants”)). However, the Appellants have sought – most vigorously, in fact − to convince us that, notwithstanding their blatant breaches of contract (and see below at [13]–[17]), the plaintiff’s (who is the respondent in both appeals (“the Respondent”)) loss is unconnected with such breaches. Indeed, much of the argument before this court was spent on the issue of causation – or, rather, the absence of causation, in so far as the Appellants are concerned.

The Appellants also had a fallback argument: if, indeed, their breaches had caused loss to the Respondent, the Respondent (so the argument ran) was nevertheless the main author of its loss. In essence, the thrust of the Appellants’ argument is that the Respondent was already suffering from a decline in sales in any event and, hence, is not entitled to seek substantial monetary compensation (in the form of damages) from the Appellants. The Appellants say that the Respondent can (at best) claim only a relatively small amount of damages.

There is yet another – albeit more subsidiary – issue. However, even this issue sees the Appellants attempting to argue that damages should be denied to the Respondent. This relates to loss or damage that was allegedly caused to the Respondent after the breaches of contract, viz, the post-breach situation. In particular, the Appellants have sought to argue that the loss in this particular situation is too remote. Although, as just mentioned, this is not one of the main issues in the present appeal, it certainly raises the spectre of a recent House of Lords decision, at least part of which differs (quite radically) in legal orientation from a decision of this court. As the legal principles involved are of the first importance for future cases, and the legal conundrum emanates from the highest appellate court in England, we must deal with it in the present appeals – not least because if, in particular, one of the legal propositions made in the House of Lords decision is correct, then the law which has stood for a century and a half (and which has been endorsed by this court) will change (and rather radically at that).

The result of all this is a curious compendium of both difficult issues of application as well as a difficult issue of law. In short, both particulars and universals have raised rather thorny questions that we must resolve. What began as a deceptively simple set of legal proceedings has metamorphosed into a rather complex mixture of factual and legal conundrums impacting on the issue of justice and fairness not only for the parties to the present appeals but also (in relation to the legal rules and principles centring on remoteness of damage) for future litigants as well.

It is best, in the circumstances, to begin from the beginning – in particular, with the basic factual matrix which constitutes the backdrop against which the various legal issues have arisen.

The factual background General

The present appeals are against the decision made by the High Court Judge (“the Judge”) with regard to the assessment of damages in Fish & Co Restaurants Pte Ltd v MFM Restaurants Pte Ltd and another [2010] 1 SLR 1104 (“the Judgment”).

The Respondent is Fish & Co Restaurants Pte Ltd, the owner of a chain of seafood restaurants called “Fish & Co”. The original assessment hearing had, in fact, taken place before an Assistant Registrar (“the AR”), whose decision was appealed against by the Respondent and cross-appealed by the Appellants. As we shall see, the Judge allowed the Respondent’s appeal and dismissed the cross-appeal by the Appellants. The first appellant is MFM Restaurants Pte Ltd (“the First Appellant”), the owner of another chain of seafood restaurants called “The Manhattan Fish Market” (“MFM”) and the second appellant is Dickson Low (“Dickson”), a former employee of the Respondent.

As part of his employment contract with the Respondent, Dickson agreed that all confidential information derived during his employment would not be wilfully divulged to outside parties and competitors, and that he would not help to set up restaurants other than for the Respondent during his employment or two years after resigning from the company. Sometime after resigning from the Respondent (around 21 August 2001), Dickson was involved in and helped to set up the First Appellant’s business. The first MFM restaurant was opened in Malaysia in 2002 and subsequently more restaurants were opened in Malaysia. Following these events, on 30 March 2004, the Respondent brought proceedings against Dickson for breaching the non-competition obligations in the contract of employment by using and divulging confidential information. The Respondent alleged that Dickson copied Fish & Co’s concepts for use in the MFM restaurants. Dickson denied the allegations. However, during the course of the trial, the parties settled and recorded a settlement deed on 27 April 2005 (“the Settlement Deed”). The First Appellant and its Malaysian counterparts were also added as parties to the Settlement Deed, although they were not parties to the suit. The Respondent claimed that it required the First Appellant’s inclusion to ensure that both Dickson and the First Appellant were prevented from employing Fish & Co’s concepts. This was especially important as it was found out during the course of trial that the First Appellant was planning to open the first MFM restaurant in Singapore. The relevant sub-clauses in the Settlement Deed for our purposes read as follows:¹ 3 Obligations

The Parties hereby undertake to fulfill the following obligations: (i) [The Appellants] undertake not to use, in the Manhattan Fish Market Restaurants around the world, within a period of four (4) months from the date of this Deed, serving pans identical and/or similar to those serving pans used in Fish & Co Restaurants. (ii) [The Appellants] undertake not to use any slogans and/or jingles identical to or confusingly similar to that used by [the Respondent] … (iii) ... (iv) [The Appellants] undertake not to use the words and/or phrases more particularly described in Schedule 3 … (v) [The Appellants] undertake, within a period of three (3) months from this Deed, to use a completely different garlic lemon butter sauce, sauce used in the dish known as “Garlic Lemon Mussels” … (collectively known as “the MFM Sauces”) … from the Garlic Lemon Butter Sauce and Lemon Butter Sauces used in Fish & Co Restaurants (“the O.B. Sauces”). ...

The four obligations will be referred to herein as “the Pans undertaking”, “the Slogans undertaking”, “the Phrases undertaking” and “the Sauces undertaking” respectively. The Respondent claimed that the four undertakings were crucial as they reflected the essence of the Fish & Co concept. The Slogans and Phrases undertakings were to take effect from 27 April 2005, while the Sauces undertaking was to take effect from 27 July 2005, with the Pans undertaking taking effect from 27 August 2005.

Subsequently, on 20 May 2005, the First Appellant began operations at Plaza Singapura, which was just 0.28 km away from the Respondent’s Fish & Co Glass House outlet situated at Penang Road. The Respondent alleged that despite the undertakings in the Settlement Deed, the Appellants had almost immediately breached cl 3 of the Settlement Deed by: using the slogan “One bite and you’re hooked” on its menus (this was one out of the 31 slogans/jingles which the Appellants agreed to refrain from using); using the phrases “Garlic Lemon Butter”, “Lemon Butter” and “Creamy Garlic Lemon” on its website; failing to use completely different sauces; and using serving pans which were similar to the serving pans used by Fish & Co. The Respondent alleged that the black pans used by MFM were similar to the pans used by Fish & Co.

On 20 September 2005, the Respondent brought proceedings against the Appellants for the above breaches. The Respondent claimed an injunction as well as damages pursuant to the alleged breaches of the Settlement Deed. The claim was (as mentioned) premised on the breaches of the Settlement Deed, and not for passing off or breach of confidentiality.

Around 8 November 2005, MFM discontinued the use of the disputed slogan and phrases.

On the first day of trial, viz, 27 November 2006, the Appellants agreed to enter into a consent judgment, with damages to be assessed (“the Consent Judgment”). The Appellants also agreed to the terms of an injunction. The relevant portions of the Consent Judgment read as follows:² 1. By consent, an injunction restraining [the Appellants] … from doing any of the following acts:- (a) In relation to Clause 3(i) of the Deed, from using in the Manhattan Fish Market Restaurants serving pans identical and/or similar to those serving pans used in the Fish & Co Restaurants with effect from 1 January 2007. (b) In relation to Clause 3(ii) of the Deed, forthwith from using any slogans and/or jingles which are identical to or confusingly similar to that used by [the Respondent] … (c) ...