Sahara Energy International Pte Ltd v Chu Said Thong and another

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu SJ
• Judgment Date: 09 December 2020
• Neutral Citation: [2020] SGHC 272
• Court: High Court (Singapore)
• Docket Number: Suit No 795 of 2018 (Summons No 2835 of 2020)
• Published date: 16 December 2020
• Year: 2020
• Hearing Date: 20 July 2020,03 August 2020
• Plaintiff Counsel: Tan Wen Cheng Adrian and Low Zhi Yu Janus (August Law Corporation)
• Defendant Counsel: Lim Soo Peng (Lim Soo Peng & Co LLC),Lam Kuet Keng Steven John, Choong Madeline and Ang Jian Xiang (Templars Law LLC)
• Subject Matter: Evidence,Witnesses,Video link
• Citation: [2020] SGHC 272

Lai Siu Chiu SJ: Introduction

The plaintiff in the present action, Sahara Energy International Pte Ltd (“Sahara”), is a Singapore-incorporated company. Sahara sued Chu Said Thong (“Chu”) and Jo Choon Ho (“Jo”), a Singaporean and a Korean respectively, as the first and second defendants (collectively, “the Defendants”) in Suit No 795 of 2018 (“this Suit”) for breach of their employment agreements with Sahara. The services of Chu and Jo were terminated on 9 July 2017. As is evident from its name, Sahara Energy Int’l Pte Ltd Singapore (Geneva Branch) is the Geneva branch of Sahara (“Sahara Geneva”) and it is the second defendant in Chu’s counterclaim, with Sahara being the first defendant in that counterclaim.

Sahara applied by way of Summons No 2835 of 2020 (“the Application”) on 9 July 2020 for leave under s 62A of the Evidence Act (Cap 97, 1997 Rev Ed) (“the EA”) for their witnesses (a) Valéry Antoine Guillebon (“Guillebon”) and (b) Nabil Alami Merrouni (‘Nabil”) (collectively, “the two witnesses”) to give their evidence through video link. Guillebon is the Chief Executive Officer (“CEO”) of Sahara Geneva while Nabil is a Senior Trader in Sahara Geneva.

I heard and dismissed the Application. Instead, I made the following orders: Sahara will forthwith apply to the Immigration and Checkpoint Authority of Singapore (“ICA”) for permission for the two witnesses to come to Singapore. If they need to be quarantined, they will serve their 14 days’ quarantine which should be completed before trial commences on 17 August 2020. Sahara will be given liberty to apply for video link evidence from Singapore in the event the two witnesses are still in quarantine when trial commences but the court has to be staisfied that Sahara has complied with the court’s orders before the court will exercise its discretion to grant video link evidence. Unless Sahara takes the steps as directed above (“an unless order”), Sahara’s claim will be dismissed with costs to the Defendants and judgment will be awarded on the Defendants’ counterclaims.

Sahara is dissatisfied with my decision and (with leave given by the Court of Appeal after I refused to grant it leave to appeal) has appealed to the Court of Appeal (in Civil Appeal No 164 of 2020) on 7 October 2020. I now furnish the grounds for my decision.

The facts

Sahara is a wholesaler in crude petroleum, solid liquid and gaseous fuels and related products. Chu was employed by Sahara as its CEO between 22 May 2017 and 9 July 2018 pursuant to an employment agreement dated 16 May 2017 (“Chu’s employment agreement”).

Jo was employed by Sahara as a Senior Trader between 1 June 2017 and 9 July 2018 pursuant to an employment agreement dated 6 April 2017 and a letter of offer dated on the same day as well (collectively, “Jo’s employment agreement”).

Chu’s employment agreement required him to report to Sahara’s Executive Director Tope Shonubi (“Shonubi”) whilst Jo’s employment agreement required him to report to Shonubi, Chu and Jo’s team leader (who was also Chu).

In Jo’s employment agreement (according to Sahara’s statement of claim) his duties included: monitoring day-to-day trading activities; generating profit and loss statements from marketing and trading of energy/petroleum refined products; and co-ordinating and working closely with other colleagues in the Singapore office as well as other business units for business optimization and profit maximization. With regards to item (b), Jo would generate profit and loss statements from his trades in his reports to Chu, Sahara’s Risks Manager Paolo Ascerbis (“Ascerbis”) and Sahara’s Chief Financial Officer Chew Saw Kim (“Ms Chew”). Profit and loss information and market-to-market (“MTM’’) valuations are entered by traders in charge of trades into an internal management system called “Nova”.

According to Sahara, Chu’s duties, inter alia, included: overseeing the operation and activities of the staff in Sahara’s Singapore office; evaluating operations and activities of assigned responsibilities and preparing weekly reports for Shonubi, and reviewing the work of staff involved in activities that support energy supply acquisition and trading.

Sahara also listed out the duties the defendants owed to the company including: to act in the interest of Sahara; to act honestly and in good faith; to act with fidelity, trust and confidence; and to act with due care and reasonable diligence.

Sahara alleged that the Defendants had breached the above duties because of losses they caused to Sahara arising out of certain trades which Jo entered into and which Sahara alleged Chu failed to monitor.

To elaborate on [10], Jo, on behalf of the Sahara, had entered into a contract with Toyota Tsusho Corporation (“Toyota”) on or about 25 September 2017 (“the Toyota Contract”) for Toyota to sell and deliver to Sahara, 6 cargo lots of refrigerated commercial propane (“the Product”). Subsequently, Jo contracted, again on behalf of Sahara on or about 10 May 2018, to sell the Product to a Korean company E1 Corporation (“E1”). The sale of the Product was concluded on 17 May 2018 (“the E1 Contract”). Essentially the Toyota and E1 Contracts were back-to-back contracts.

Sahara’s purchase price under the Toyota Contract depended on the average price of Argus Far East Index (“AFEI”) reported in Argus International LPG for the delivery month plus US$1.15 per metric ton. Sahara’s sale price under the E1 Contract was to be 83.4% average price of the mean of Platt’s quotations for Naptha as published in Platt’s Asia Pacific/Arab Gulf Market Scan (“MOPJ”) for the delivery month per metric ton.

Without going into the technicalities involved and too much detail, Sahara’s profits on the Toyota Contract and the E1 Contract depended on the differential between AFEI and MOPJ where a differential higher than 83.4% meant a loss for Sahara while a differential of less than 83.4% meant Sahara made a profit.

Jo had apparently hedged Sahara’s position on the E1 Contract by buying 300 lots of AFEI/MOPJ on or about 11 May 2018. The MTM valuation showed a loss of $1m a day after the E1 Contract. The spread between AFEI and MOPJ also increased sharply, putting Sahara in a worse position.

Sahara alleged that the defendants concealed and or downplayed the losses incurred by Sahara on the Toyota and E1 Contracts as early as May 2018. Jo had informed Chu on 14 May 2018 that the E1 Contract had incurred a loss of $1,851,281.30. Between 14 May 2018 and 27 June 2018, Sahara’s losses at the two Contracts increased to $5.9m. It was only through a telephone call from Chu, Acerbis and Ms Chew to Shonubi around 28 June 2018 that Sahara was made aware of the losses. The overall losses were at least $6m by the first week of July 2018.

In the light of the ballooning losses, on 29 June 2018, Ascerbis hedged 40% of the August and September positions. On 2 July 2018, Chu was pressed by Ascerbis to hedge 56% of the October to December 2018 positions.

Sahara alleged that Jo then misrepresented to Sahara’s management on 27 June 2018, by way of a weekly report to Shonubi, and Sahara believed, that Jo’s losses were only $882,000 instead of $6m. Without full and adequate information of the actual loss incurred by Jo, Sahara was not able to mitigate its loss.

It was Sahara’s case that the Defendants breached the duties under their respective employment agreements. In Chu’s case, he failed, inter alia, to report Jo’s trading activites and performance in relation to the Toyota and E1 Contracts and failed to instruct Jo to hedge more so as to mitigate Sahara’s loss.

As for Jo, Sahara also alleged he misrepresented to Shonubi on 27 June 2018 that the losses suffered by Sahara were $882,000 instead of at least $6m.

Sahara summarily terminated the Defendants’ services on 9 July 2018, commenced this Suit and filed its statement of claim shortly thereafter, on 8 August 2018. In the respective defences that they filed, Chu and Jo denied Sahara’s allegations as raised in the statement of claim. Further, the defendants lodged counterclaims against Sahara and Sahara Geneva.

In his defence, Chu disputed Sahara’s allegations. He alleged that Sahara had no grounds under cl 9.4 of Chu’s employment agreement to summarily dismiss him. Chu further alleged he had been defamed by Guillebon’s email of 9 July 2018 (“Guillebon’s email”) that was sent out to all staff in the offices of Sahara and Sahara Geneva in Singapore, Geneva and Dubai. Chu alleged that Guillebon’s email contained untrue, scurrilous and defamatory statements that disparaged, damaged and impugned his character and reputation. Consequently, Chu counterclaimed, inter alia, for loss of one month’s salary (in lieu of notice), loss of annual bonus and damages for injury to his reputation resulting from Guillebon’s email.

In his defence, Jo also denied he had breached the terms of his employment agreement. Jo disputed Sahara’s allegation that he falsified reports, exceeded his stop-loss limit and was unable to meet his targets which acts amounted to gross negligence. He denied making any of the representations alleged by Sahara or that he misconstrued Sahara’s trading position as at 27 June 2018. Jo contended that Sahara was not entitled to dismiss him without notice under cl 9.4 of his employment agreement. In fact, by terminating his employment, Jo asserted he was prevented from carrying out further trades to mitigate Sahara’s exposure.

Like Chu, Jo counterclaimed from Sahara one month’s loss of salary (in lieu of notice), salary in lieu of accrued annual leave and loss of employer’s CPF contributions.

The pleadings were closed on 16 April 2019 with the filing of Further and Better Particulars of the statement of claim by Sahara.

The Application

On 5 June 2020, the parties attended before this court for a Pre-trial conference hearing (“PTC”). Upon the court’s...