Panatron Pte Ltd and Another v Lee Cheow Lee and Another

JurisdictionSingapore
CourtCourt of Three Judges (Singapore)
JudgeChao Hick Tin JA
Judgment Date04 July 2001
Neutral Citation[2001] SGCA 49
Citation[2001] SGCA 49
Plaintiff CounselAnand K Thiagarajan and Ramesh Appoo (Anand T & Co)
Subject MatterMisrepresentation,Fraud and deceit,Elements of tort,Whether failure to act cautiously and to take steps to verify truth of representations a defence,Tort
Date04 July 2001
Defendant CounselGan Kam Yuin (Bih Li & Lee)
Published date05 November 2003
Docket NumberCivil Appeal No 147 of 2000

JUDGMENT:

Cur Adv Vult

The facts

1. The first appellant, Panatron Pte Ltd (‘Panatron’), is a company engaged, inter alia, in the business of dealing in automatic condensor cleaning system for air conditioning chillers. The second appellant, Phua Mong Seng (‘Phua’) was its founder and is the president or managing director of the company.

2. The first respondent, Lee Cheow Lee (‘Lee’), is a certified public accountant by profession. Prior to the events that gave rise to the present dispute, he worked as a consultant in a company called Enterprise Promotion Centre Pte Ltd, which helped clients in their businesses. In May or June 1996, discussions took place between Phua and Lee, and arising from these discussions, Lee joined Panatron on 30 January 1997 and was employed as the senior vice president in charge of corporate affairs and also carrying out the duties as a financial controller. He also agreed to subscribe for 200,000 shares in Panatron at a total price of $200,000. Some eight months later, on 20 August 1997, he resigned from Panatron and left the employment immediately. As of that date, he had paid Panatron only $189,000 for the shares.

3. The second respondent, Yin Chin Wah Peter (‘Yin’), was in the employ of Panatron for about two years. He joined the company on 31 May 1995 as the vice president on international marketing and was also the general manager of one of Panatron’s subsidiaries, BTE Asia Pte Ltd, which dealt with the supply of a system, known as the Ball Technic system, which is involved in the heat exchange tube cleaning process in the air conditioning industry. He was also a shareholder of Panatron. On or soon after he joined the company, he agreed to subscribe for 300,000 shares of $1 each in Panatron. He had fully paid for all the shares he agreed to subscribe.

4. Prior to his joining Panatron, Yin had known Phua for sometime. They had both worked in a subsidiary of the Singapore Technologies group, where Yin was Phua’s subordinate. Later, Yin left the company, and worked for Shell Asia Pacific Pte Ltd in Singapore, which distributed in the region, amongst other things, products manufactured by a firm, Chemtour of Queensland, Australia. Chemtour is owned by an Australian company, in which one Eral Dettrick (‘Dettrick’) and his wife hold all the shares. Effectively, Chemtour is run and managed by Dettrick.

5. While he was working in Shell Asia Pacific Pte Ltd, Yin came to be acquainted with Dettrick and developed a good business rapport with him. Later, after he had joined Panatron, Yin introduced Dettrick to Phua, and was instrumental in the negotiations between Phua and Dettrick for a licence to manufacture Chemtour’s product in Singapore. Following the negotiations, a licence agreement was made on 22 September 1995 between Chemtour and Panatron, whereby Chemtour granted to Panatron the exclusive licence to use a technology to manufacture and sell, within the prescribed territories, certain waterproofing membranes and protective coatings in paints. After the execution of the licence agreement, Panatron purchased the necessary equipment and renovated its factory and started production in January 1996.

6. Panatron’s business relationship with Chemtour was shortlived. Panatron repeatedly fell into arrears with the royalty payments under the licence agreement and various problems seemed to emerge in the company. On 22 July 1997, Chemtour gave a formal notice to Panatron pointing out the breaches of the agreement and stating its intention to terminate the agreement. This was followed by the letter of 11 August 1997 from Chemtour’s solicitor stating that the licence agreement would terminate on 23 August 1997, unless in the meanwhile Panatron paid up all the arrears of royalties. No payment, however, was made by Panatron, and the agreement was accordingly terminated on 23 August 1997.

7. Prior to that, on 20 August 1997, Lee gave notice of resignation from Panatron, and left the company immediately. Two days later, Yin gave notice of resignation and served out his notice and left the company on 22 September 1997.

8. Soon after the termination of the licence agreement, Dettrick formed a company in Singapore called Chemind Construction Products Pte Ltd, to take over the supply of the products, which were previously supplied by Panatron, to the various customers in Singapore, and both Lee and Yin had some involvement in that company. Presumably, because of these activities on the part of Dettrick, Lee and Yin, Panatron commenced an action against Lee, Chemind Construction Products Pte Ltd, Yin and Dettrick claiming damages for conspiracy on their part to injure Panatron and also claiming against Lee and Yin damages for breach of contract and breach of fiduciary duties. The claims were resisted. In the same action, both Lee and Yin in turn counterclaimed...

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