Nagase Singapore Pte Ltd v Ching Kai Huat and Others

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 03 October 2007
• Neutral Citation: [2007] SGHC 169
• Date: 03 October 2007
• Subject Matter: Company and director as co-conspirators,Director aware of overcharging,Conspiracy,Director moving spirit of company,Tort,Whether company having separate mind so as to conspire with director,Company overcharging customer
• Docket Number: Suit No 751 of 2003
• Published date: 07 December 2007
• Defendant Counsel: Lim Kim Hong (Kim & Co),Kannan Ramesh and Siraj Omar (Tan Kok Quan Partnership),Jagjit Singh and Gurdip Singh (Gurdip & Gill)
• Court: High Court (Singapore)
• Plaintiff Counsel: Philip Lam (Lam & Co)

3 October 2007

Judith Prakash J:

Introduction

1 This judgment is a follow up to the decision [Nagase Singapore Pte Ltd v Ching Kai Huat & ors [2007] 3 SLR 265] (“the first judgment”) that I delivered in this action on 4 May 2007. At the end of the first judgment, I directed the parties to furnish me with further submissions on three issues. This second judgment deals with those issues and therefore I will use the same abbreviations for the parties and the relevant witnesses that I employed in the first judgment. I will not repeat the facts herein except to the extent necessary to explain the submissions and my reasoning.

2 In the first judgment, I made the following findings that are material for the purposes of this judgment:

(a) that CY was in breach of his duty to the plaintiff in agreeing to the plaintiff being charged for storage charges on the basis of truncated weeks and also by reason of his failure to oversee MT’s actions in relation to the setting up and operation of a proper system of verification of D Logistics’ invoices;

(b) that MT was in breach of her duty to the plaintiff by reason of her failure to set up a proper system of verification of D Logistics’ invoices and her further failure to properly supervise the system that was set up;

(c) that MT would be liable to compensate the plaintiff for all the overcharges relating to excess tonnage and packages only;

(d) that CY would be liable to compensate the plaintiff for the same type of overcharges as MT and would also be liable to compensate the plaintiff for the overcharges relating to the truncated weeks;

(e) that D Logistics would be liable to repay the plaintiff the moneys it had overcharged the latter;

(f) that MT and CY were not co-conspirators with D Logistics and DC to injure the plaintiff; and

(g) that DC must have known of the overcharging as it occurred and been privy to it.

3 I also stated that although the plaintiff had claimed the sum of $913,541.68 as being the amount overcharged by D Logistics, it had not particularised how each form of overcharging had contributed to the overall figure. Since I had found that only some of the claims of overcharging had been successful, I could not arrive at the quantum of loss that each of the defendants’ actions had caused the plaintiff. I therefore needed to know the breakdown, to the extent that the evidence was already before the court.

4 The issues that remained unresolved at the end of the first judgment and that I asked for further submissions on were:

(a) the quantum of the damages payable by each of D Logistics, CY and MT;

(b) whether, legally, DC and D Logistics could on their own, irrespectively of any participation by MT and CY, be said in law to be liable in conspiracy to the plaintiff; and

(c) the appropriate costs orders that should be made in the light of my findings in the first judgment.

5 As a finding on the second issue may have an impact on the quantum and on costs, I will deal first with the conspiracy issue. Thereafter, I will consider the quantum of damages and, finally, deal with costs.

Conspiracy between D Logistics and DC

6 The plaintiff in its pleadings had primarily relied on a conspiracy by all the defendants to injure it by unlawful means. I found that MT and CY did not conspire with DC and D Logistics to do any of the things they were accused of. There was no doubt, however, that D Logistics had injured the plaintiff by intentionally overcharging it and my finding was that DC was responsible for this overcharging. The issue was whether DC and D Logistics could on their own, be said in law to be liable in conspiracy to the plaintiff, as I had found that DC was the alter ego of D Logistics and some authorities have expressed the view that a combination may not exist between a corporation and natural persons where the persons involved are the partners or directors of the corporation.

7 Before I set out the submissions made on behalf of DC and the plaintiff, it may be helpful to review how the plaintiff pleaded its case against DC. The relevant paragraphs of the statement of claim (amendment no. 6) (omitting particulars of allegations that are not relevant to the present issues) are the following:

29. Further or alternatively, on (or on about) or before (or before about) the dates set out in paragraph 30, below, all the Defendants (or any 2 or more together) wrongfully and with intent to injure the Plaintiffs and/or to cause loss to the Plaintiffs by unlawful means conspired and combined together to cause loss to the Plaintiffs and to conceal such loss from the Plaintiffs.

30. Pursuant to and in furtherance of the conspiracy pleaded in paragraph 29, above, all the defendants (or 1 or more of them) carried out the following unlawful acts and means by which the Plaintiffs were injured:-

…

(e)(i) From (or from about) August 2001 to (or to about) May 2003, the Second Defendants [D Logistics] (and the First Defendant [DC] procured the Second Defendants to) unlawfully interfered with the Plaintiffs’ business and/or contracts and/or in breach of the First Agreement and, subsequently, in breach of the Second Agreement, wrongfully over-charged the Plaintiffs as pleaded hereinabove.

Looking at that pleading, therefore, the essential allegation was that all the defendants conspired to wrongfully interfere with the plaintiff’s contracts and business and to wrongfully overcharge the plaintiff. If the references to CY and MT are removed from the pleading because of the findings I have made, then the plaintiff’s pleaded case becomes an averment that DC and D Logistics conspired to wrongfully interfere with its business using unlawful means and, in pursuance of that conspiracy, DC procured that D Logistics wrongfully overcharged the plaintiff.

8 The plaintiff’s further submission on this issue was that the fact that D Logistics was a company controlled by DC did not prevent a finding in law that D Logistics could be regarded as a separate individual from DC so as to permit a further finding that the two of them could, legally, combine and conspire to injure the plaintiff. The plaintiff relied on the case of Chong Hon Kuan Ivan v Levy Maurice & Ors (No. 2) [2004] 4 SLR 801 (“Chong Hon Kuan case”). There, the first, second and third defendants were directors of a company (“Publicis Singapore”) which also employed the plaintiff (“Chong”). Chong made a claim against these three defendants for conspiracy to induce, and then inducing, Publicis Singapore to terminate Chong’s employment. The action was unsuccessful. Applying the principle (“the Principle”) established by Said v Butt [1920] 3 KB 497 and the cases that followed it, Woo J held that if a servant acting bona fide within the scope of his duty procured or caused the breach of a contract between his employer and a third party, he did not thereby become liable to an action in tort at the suit of the person whose contract had been broken.

9 Mr Lam, counsel for the plaintiff, submitted that this result had been reached in the Chong Hon Kuan case because the court regarded the case as one where the tortious act of the defendants had not been done by illegal means. Thus, Woo J had observed (at [46] of the judgment):

The allegation of a sole or predominant intention to injure is a standard requirement in any allegation raising the tort of conspiracy to injure where the tortious act is not done by illegal means. It was my view that if such an allegation were sufficient to deprive a defendant director from the protection of the Principle [i.e. the principle established by Said v Butt], then the Principle would become emasculated.

Mr Lam submitted that in this case as far as DC and D Logistics were concerned, the tortious act was done by clearly illegal means viz, by deliberately overcharging the plaintiff amounts which D Logistics was not entitled to charge. Furthermore, this was not a case where the plaintiff merely alleged the “standard requirement” of a sole or predominant intention to injure without more. The plaintiff had also alleged and proved that it was DC who procured D Logistics to unlawfully interfere with the plaintiff’s business and/or wrongfully overcharge it in breach of contract. In view of the findings in the first judgment that DC knew of the overcharging as it occurred, that he was privy to it and that D Logistics deliberately overcharged with DC’s knowledge, it was submitted that DC ought not to be entitled to protection under the Principle. DC could not in the circumstances be said to have acted in a bona fide manner within the scope of his authority. In these circumstances, it was fair and reasonable to impose liability on DC for conspiring with D Logistics to wrongfully overcharge the plaintiff. The Principle was meant to protect persons in authority within corporate entities who genuinely and honestly endeavoured to act in the company’s best interests. Such protection would not apply to DC who wrongfully and dishonestly caused D Logistics to unlawfully overcharge the plaintiff thereby exposing D Logistics to liability. In my view there is much merit in this submission.

10 It would be noted that in Chong Hon Kuan the alleged conspiracy was amongst the three directors of Publicis Singapore. Publicis Singapore itself was not a party to the conspiracy. Therefore, the case did not discuss the issue of whether a single director and the company which he directed could legally be considered co-conspirators. It did, however, quote the following paragraph from the judgment of Starke J of the High Court of Australia in the case of O’Brien v Dawson (1942) 66 CLR 18 (at 32-33) which sets out the conceptual objection to treating a company and its directors as separate individuals for the purpose of conspiracy:

… A company “cannot act in its own person for it has no person” (Ferguson v Wilson). So it must of necessity act by directors, managers or other agents. The company, if it were guilty of a breach...