Piattchanine, Iouri v Phosagro Asia Pte Ltd

• Jurisdiction: Singapore
• Judge: George Wei J
• Judgment Date: 09 October 2015
• Neutral Citation: [2015] SGHC 259
• Plaintiff Counsel: Eugene Thuraisingam and Jerrie Tan (Eugene Thuraisingam LLP)
• Docket Number: Suit No 404 of 2014
• Date: 09 October 2015
• Hearing Date: 16 April 2015,15 April 2015,20 May 2015,17 April 2015
• Subject Matter: misconduct,Employment law,contractual terms,fundamental breach,Contract,termination,contract of service
• Year: 2015
• Citation: [2015] SGHC 259
• Defendant Counsel: Andrew Ang and Andrea Tan (P K Wong & Associates LLC)
• Court: High Court (Singapore)
• Published date: 04 November 2016

George Wei J:

Iouri Piattchanine (“the Plaintiff”) commenced Suit No 404 of 2014 claiming sums he asserts are due to him following the termination of his employment as Managing Director of Phosagro Asia Pte Ltd (“the Defendant”) on 28 February 2014. The Plaintiff’s claims were essentially advanced on two fronts: for sums due under the contract, and alternatively, for damages pursuant to a breach of contract. The Defendant counterclaims for sums which it alleges the Plaintiff has wrongfully paid to himself by way of expense claims.

Background facts

The Defendant is a company incorporated in Singapore and is engaged in the fertiliser trade. The Defendant is fully owned by Phosint Trading Limited, a Cyprus-incorporated company. Phosint Trading Limited is, in turn, fully owned by the Phosagro Group (which is based in Russia)¹. The Plaintiff was the Managing Director of the Defendant for close to a year before the termination of his employment. The Plaintiff is an experienced senior manager in the fertiliser trade. Maxim Popov (“Popov”) was the Defendant’s other director throughout the material period². He is also the key witness for the Defendant in the present suit. The history of the present dispute traces back to a share purchase agreement signed between the Plaintiff and Phosint Trading Limited.

Share purchase agreement

For almost a year prior to 26 February 2013, the Plaintiff was the sole director and shareholder of Asiafert Trading Pte Ltd (“Asiafert”)³. Sometime in November 2012, Andre Guryev (“Guryev”), the Chief Executive Director of the Phosagro Group, approached the Plaintiff about a possible sale of Asiafert to the Phosagro Group⁴.

The negotiations culminated in a share purchase agreement dated 26 February 2013 for the purchase of Asiafert by Phosint Trading Limited (“the SPA”). ⁵ The SPA is exhibited in the Plaintiff’s affidavit of evidence-in-chief (“AEIC”).⁶

I highlight several material terms in the SPA: By cl 3, the consideration for the purchase of 100% of the shares in Asiafert was US$207,539. By cl 9.8, the Plaintiff was to bear “all costs incurred by [him] in connection with the preparation, negotiation and entry into of this Agreement and the sale of the Shares”. By cl 1.2.2 of Schedule 2, one of Phosint Trading Limited’s closing obligations was to “deliver an employment agreement recording the terms of [the Plaintiff’s] continued employment as the Managing Director by the Company” on mutually agreeable terms. By cl 2.2 of Schedule 3, the Plaintiff warranted that Asiafert had no outstanding liabilities as of 26 February 2013.

When the Phosagro Group bought over Asiafert, they renamed it Phosagro Asia Pte Ltd (ie, the defendant in the present suit).⁷

In short, the Plaintiff sold his company (Asiafert) to Phosint Trading Limited and the Phosagro Group. Aside from the sale price, the Plaintiff’s employment as Managing Director of Asiafert was to be continued on mutually agreeable terms. Indeed, the Plaintiff claims that Asiafert was sold at a “low value” because of the understanding that he would be employed by Phosagro Asia.⁸

The Plaintiff’s employment contract

Pursuant to an employment agreement dated 1 March 2013 (“the Employment Contract”), the Defendant hired the Plaintiff as its Managing Director. The Plaintiff exhibited the Employment Contract in his AEIC.⁹ Evidence of pre-contractual negotiations was adduced by the parties.¹⁰ It is undisputed that the Plaintiff prepared the draft of the Employment Contract.¹¹

The Plaintiff signed his own Employment Contract on behalf of the Defendant, his employer.¹² When cross-examined as to whether the Phosagro Group had sight of the Employment Contract, the Plaintiff asserts that drafts of the Employment Contract were discussed and exchanged between the Plaintiff, Guryev, and Sergey Sereda (“Sereda”), the Deputy Chief Executive of the Phosagro Group. The Plaintiff asserts that Guryev and Sereda agreed to the Employment Contract exhibited in the Plaintiff’s AEIC.¹³ I have no reason to doubt this evidence.

I note that the copy of the Employment Contract exhibited in Popov’s AEIC¹⁴ is identical to that exhibited in the Plaintiff’s AEIC, save that “Annex 2” (on housing entitlement) is missing from the version of the Employment Contract exhibited in Popov’s AEIC. In this regard, the Plaintiff was cross-examined on whether he had sent Annex 2 of the Employment Contract to Guryev and/or Sereda for approval. The Plaintiff claimed that he could not remember if the Annexes were sent to Guryev and/or Sereda, but insisted that the parties had agreed on all the terms therein.¹⁵

At this juncture, I stress that save for Annex 2, the Defendant does not challenge the terms and validity of the Employment Contract exhibited in the Plaintiff’s AEIC.¹⁶ The only disputed fact appears to be whether Annex 2 also forms part of the Employment Contract, however, nothing turns on this.

I now set out some of the material terms in the Employment Contract:

2. Subject as hereinafter provided the employment shall commence on 1st March, 2013 for the period of three years having the option to be renewed by another term with parties intentions to be decided one year before expiry of the first term unless terminated by either party to the agreement by giving to the other party not less than three months’ notice in writing. 100% annual salary as one-off payment to be settled in case contract is terminated before expiry of it’s validity.

3. During the continuance of this agreement, the employee shall, unless prevented by ill-health, devote such of his time and attention to the business of the Company as shall be required for the proper performance of his duties and in all respects conform to and comply with the directions and regulations of the Board of directors of the Company and shall well and faithfully serve the Company in all respects and use his best endeavours to promote the interests of the Company…

…

6. The employee shall be entitled to receive annual bonuses as specified from time to time.

…

14. … Except of any reason stipulated in Point 20 of this Employment Contract, if the employee is terminated or resigns prior to the completion of his contractual period, annual salary as one-off payment to be settled in full, should the contract is terminated before expiry of its validity. employer shall give employee, or vice versa, three months’ notice in writing.

…

20. If at any time during his employment, hereunder the employee shall be guilty of any serious misconduct or any wilful breach or non-observance of any of the stipulations herein contained and on his part to be observed or performed or shall compound with his creditors generally or shall have a Receiving order in bankruptcy made against him then and in any such case, the Company may terminate the employee’s employment hereunder without any notice or payment in lieu of notice.

[emphasis in italics added]

The Plaintiff’s salary was provided for in cl 5 of the Employment Contract and was set out in “Annex 1” (being S$40,600 per month from 1 March to 31 December 2013, and S$47,300 per month thereafter). The Plaintiff’s bonus entitlement was provided for in cl 6 of the Employment Contract and was set out in “Supplement to Annex 1” (being a guaranteed bonus of 50% of the Plaintiff’s annual remuneration, and a discretionary bonus of up to 50% of the Plaintiff’s annual remuneration). The relevance of this will become clearer below in the context of the Plaintiff’s entitlement (if any) to a “one-off” bonus when his contract is terminated prior to expiration of the three-year term.

Besides his salary and bonuses, in brief, the Plaintiff was also entitled to the following benefits under the Employment Contract: Clause 7: to have a telephone and overseas telephone bills incurred in discharge of his duties paid for by the Defendant. Clause 8: to have his utility bills paid for by the Defendant. Clause 9: club membership fees, membership fees in various business clubs which are deemed beneficial to the Defendant’s business, as well as fees for language courses, business schools, and seminars would be borne by the Defendant. Clause 10: the Defendant was to provide a motorcar “of suitable type” for official and private use (all associated expenses including petrol and parking fees were to be paid by the Defendant). Clause 11: to be reimbursed for all travelling, hotel and other out-of-pocket expenses incurred during business trips “according to the Company regulations”. Clause 12: to be reimbursed for all entertainment expenses reasonably incurred in discharge of his duties in “accordance with the Company regulations”. Clause 13: to be provided free medical consultations and medicine for him and his family. Clause 16: his and his family’s travelling expenses during annual leave would be borne by the Defendant. Clause 19: the Defendant was to purchase life and accident insurance policies for the Plaintiff.

“Annex 2” to the Employment Contract states that the Defendant is obliged to pay for the Plaintiff’s housing rent. It will be recalled that the parties disagree whether “Annex 2” is properly part of the Employment Contract.

The management of the Defendant

As managing director, it appears that the Plaintiff had wide-ranging powers to run the Defendant’s business and entertain actual or potential business partners. There was no evidence that the Plaintiff had to report to anybody when making day-to-day financial or other decisions on behalf of the Defendant. Based on the evidence before me, there were no rules relating to the corporate governance of the Defendant imposed by the new owners. Indeed, this is borne out by the fact that the Plaintiff was even permitted to sign his own employment contract.

The Plaintiff managed the Defendant with Popov, the Defendant’s other director. Whilst the evidence could have been clearer, it...