Personal Automation Mart Pte Ltd v Tan Swe Sang

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 06 April 2000
• Neutral Citation: [2000] SGHC 55
• Court: High Court (Singapore)
• Year: 2000
• Published date: 11 March 2013
• Plaintiff Counsel: Wong Soo Chih with Jason Toh (Ho Wong & Partners)
• Defendant Counsel: A Rajandran (A Rajandran Joseph & Nayar)
• Citation: [2000] SGHC 55

JUDGMENT:

Cur Adv Vult

Background

1. Mr Ray Cheng is the founder of a number of companies including Besta International Pte Ltd (‘Besta’) and the plaintiff. He is also the main investor in these companies. Up to the end of 1998, the defendant was a director of the plaintiff company and a shareholder. As far as I know, she still holds shares in the plaintiff company.

2. The defendant first worked with Mr Cheng in Besta in 1991 and when he established the sole proprietorship that preceded the plaintiff, for the purpose of specialising in the retail of computer notebooks, the defendant was appointed its general manager. When the plaintiff was incorporated in 1994, the defendant became one of the promoters and initial directors and she continued to work in the company until her resignation became effective in January 1999.

3. This action relates to the defendant’s conduct in 1997 and 1998 while she was still employed by the plaintiff and also to things she has done since leaving its employment. The plaintiff’s suit is three pronged. First, it accuses the defendant of breach of fiduciary duty in relation to a particular notebook retailing project undertaken by the plaintiff while in the plaintiff’s employ that since January 1999 has been taken over by another business, Newstead Technologies (‘Newstead’), for which she now works. Secondly, the defendant is alleged to have been negligent in her handling of the affairs of the plaintiff such that it suffered trading and stock losses. Thirdly, the plaintiff has various financial claims against the defendant involving an alleged car loan and overpayment of salary. The defendant denies all the plaintiff’s allegations and has in turn put in a counterclaim for unconsumed leave for which she has not been paid and arrears of salary.

4. I will deal with the relevant facts in conjunction with each of the claims. At the outset it is necessary to identify the various persons who played a part in the various events. Grouped by organisation these are:

(1) PERSONAL AUTOMATION MART PTE LTD (plaintiff)

(a) Cheng Dar Aur @ Ray DA Cheng – promoter, shareholder and current managing director of the plaintiff.

(b) Mindy Tan Swe Sang – promoter and initial director of the plaintiff, officially appointed managing director in March 1998 and held this post until her resignation; currently consultant to Newstead.

(c) Frankie Tan Soon Foo – the defendant’s nephew, he was employed by the plaintiff in March 1998 as a technician and left their employment in February 1999; currently a manager in Newstead.

(d) Derrick Sho Seng Han – employed by the plaintiff in July 1996 as a sales executive, subsequently promoted to manager, he left its employment in February 1999; currently sales manager of Newstead.

(e) Desmond Ong Chee Eng – employed by the plaintiff in June 1997 as a sales executive, subsequently promoted to senior sales executive and then to manager, he left the plaintiff’s employ in early April 1999; currently manager of Newstead’s Sim Lim Square showroom.

(f) Jason Phee Nae Haur – employed by the plaintiff in February 1995 as a sales executive, subsequently promoted to assistant manager, operations manager, purchasing manager and retail operations manager and, in 1998 to director; he left the plaintiff’s employ in May 1999; currently employed by Newstead.

(g) Patrick Lau Lee Woo – employed as a sales executive in June 1997 by PDA Junction Pte Ltd, a company related to the plaintiff, in May 1998 on its closing transferred to the plaintiff as a showroom manager, left the plaintiff in January 1999; joined Newstead the following month as a sales executive.

(h) Ms Chiew Pei San – employed by the plaintiff in February 1998 as administrative assistant working in the accounts department.

(i) Ms Connie Lai Yean Hui – in November 1995 she joined the plaintiff as an accounts assistant/executive and left them in February 1999; currently working with Newstead in charge of accounts.

(j) Ms Mavis Toh Bee Ling – from August 1995 was Besta’s accounts executive and in that capacity helped in the accounts department of the plaintiff; from 1997 was employed on a full time basis as financial controller of the plaintiff until February 1998.

(k) Ng Boon Kwan (BK Ng) – the plaintiff’s financial controller from December 1997 to October 1998.

(l) Ms Sandra Puah Sai Pui – the plaintiff’s accountant from October 1998 to February 1999.

(m) Kelvin Ng Mee Chee – employed by the plaintiff as a corporate sales executive between October 1997 and August 1998, he is currently serving time for having committed criminal breach of trust of the plaintiff’s goods.

(n) Patrick Ong – employed by the plaintiff as its Corporate Sales Manager in 1997, he sold computers on credit to a company called KNE Asia Pte Ltd (‘KNE’) which subsequently failed to pay for them.

(2) NEWSTEAD TECHNOLOGIES

(a) Ms Joey Liao Chyea Yue – 21 years old, the registered sole proprietor of Newstead; currently working in a hotel.

(b) Sebastian Sim Chye Hock – the self-proclaimed beneficial owner of Newstead and various other businesses.

(3) COMPAQ COMPUTER ASIA PTE LTD (‘Compaq’)

Raymond Wah Jun Jack – sales manager for the Singapore-Indonesia Consumer Business Unit of Compaq.

(4) GREAT EASTERN LIFE ASSURANCE CO LTD (‘GEL’)

Ms Jennifer Low Su Ying – marketing officer with GEL and main project co-ordinator for the Great Eastern Life Mobile Systems (‘GEMS’) project since August 1998.

First claim – breach of fiduciary duty

5. The essence of this claim is contained in paras 3 to 12 of the statement of claim. They commence with an allegation that in breach of her duties, and whilst she was still employed by the plaintiff, the defendant wrongfully set up Newstead on 29 December 1998. Para 4 goes on to state that Newstead deals in computer hardware, computer software and accessories and is in direct competition with the plaintiff. The next allegation made is that the defendant is the general manager of Newstead.

6. According to paras 6 and 7, in mid 1998, the defendant, on behalf of the plaintiff entered into negotiations with Compaq for the GEMS project. The plaintiff was subsequently awarded the contract and appointed the sole back-up service dealer to supply Compaq notebooks to GEL insurance agents and to install the GEMS software in those computers. Pursuant to this agreement also, the plaintiff sent its employees for special training on GEMS between September and October 1998. Subsequently, in breach of her duties, the defendant wrongfully solicited five of these employees away from the plaintiff and employed them at Newstead. These were Patrick Lau, Derrick Sho, Connie Lai, Desmond Ong and Frankie Tan. Alternatively, the plaintiff pleads that these five persons agreed with the defendant to intentionally injure the plaintiff by soliciting the GEMS project from Compaq.

7. Further, in breach of her duties, the defendant wrongfully solicited the GEMS project away from the plaintiff when Compaq had already awarded it to the plaintiff and thereby induced Compaq to commit a breach of contract. Consequently, the defendant caused the GEMS project to be awarded to Newstead instead. Alternatively, the defendant wrongfully and improperly made use of knowledge about the GEMS project, acquired by her by reason of her position as a director of the plaintiff and diverted the project to Newstead to make a profit for herself. In the further alternative, the plaintiff alleges that the defendant wrongfully usurped the corporate opportunity of the plaintiff for which it had been negotiating by inducing Compaq to divert the GEMS project from the plaintiff to Newstead.

(i) Relevant facts

8. The material events commenced in about mid 1998. At that time, the defendant officially held the position of managing director of the plaintiff having been so appointed pursuant to a resolution dated 30 March 1998 though the plaintiff’s stand is that she had been acting as managing director since its incorporation. The defendant’s position is that Mr Cheng, who also held a directorship, was the real boss and that she deferred to him in everything.

9. By mid 1998, the plaintiff’s operations had expanded considerably. It had four showrooms (or shops) in all: one in Sim Lim Square and three in Funan Centre. The third unit in Funan Centre, unit 03-34, had been occupied by PDA Junction Pte Ltd until it ceased trading some time in May 1998 whereupon the plaintiff had taken over the unit. The plaintiff had five separate departments comprising the retails operations department headed by Jason Phee, the corporate sales department, the engineering/technical department, the accounts department headed by BK Ng (and earlier by Mavis Toh) and the head office which originally had premises at Peninsula Plaza. Sometime in 1998 in a cost-cutting exercise, the head office was moved to Yong Da Building where other companies belonging to Mr Cheng were also located.

10. There is some dispute about the scope of the defendant’s duties but she did agree that these included taking care of the plaintiff’s overall management, purchasing, marketing, human resources and dealing with suppliers. Purchasing was her speciality. The defendant was generally recognised to have excellent relationships with the suppliers of computers, both the manufacturers themselves and their authorised distributors. One of these suppliers was Compaq.

11. Prior to June 1998, the plaintiff company was not allowed to purchase computers directly from Compaq. The marketing scheme adopted by Compaq was to sell its computers on a wholesale basis to only a few exclusive distributors or direct dealers. Those distributors in turn would supply the retail outlets like the plaintiff company and Newstead. In June 1998, however, the plaintiff and Compaq entered into a direct dealership. This involved the plaintiff furnishing Compaq with a bank guarantee for US$130,000 to secure Compaq in respect of the price of computers purchased from...