Shenzhen Kenouxin Electronic Co Ltd v Heliyanto and others

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu SJ
• Judgment Date: 21 July 2016
• Neutral Citation: [2016] SGHC 139
• Citation: [2016] SGHC 139
• Court: High Court (Singapore)
• Published date: 23 July 2016
• Docket Number: Suit No 441 of 2013
• Plaintiff Counsel: Roy Yeo and Sankar Saminathan (Sterling Law Corporation)
• Defendant Counsel: Moiz Sithawalla, Teng Po Yew, and Zara Chan (Tan Rajah & Cheah)
• Subject Matter: Agency,Agent's liabilities,Third party and principal's relations,Contractual relations,Contract,Breach
• Hearing Date: 13 April 2016,12 April 2016

Lai Siu Chiu SJ: Introduction

This was a case involving the purchase of goods by Shenzhen Kenouxin Electronic Co Ltd (“the plaintiff”) through an individual Heliyanto (“the first defendant”) from a Singapore company called Express Logic Pte Ltd (“the second defendant”) and an Indonesian company called PT Mega Mandiri Batam (“the third defendant”).

The plaintiff is a company situated in Shenzhen, China, and is in the business of dealing in electronic parts and components, including integrated circuit chips (“chips”). Its purchasing director is one Huang Haiyan (“Huang”), otherwise known as Annie Huang. The first defendant is an Indonesian national, but is also a permanent resident of and resides in Singapore. He is a director and shareholder of a Singapore company called KLS International Pte Ltd, a company which he set up on 2 November 2010. It is now known as Kho Industries Pte Ltd (“Kho”). Kho is involved in various trading activities, including dealing in chips. Prior to setting up Kho, the first defendant worked as a purchaser for a company called Trio-Tech International Pte Ltd (“Trio-Tech”), which also dealt in chips.

The second defendant was incorporated on 2 August 2011 by one Fu Qiming (“Fu”). It is also in the business of trading in electronic components, including chips. The first defendant left Trio-Tech in early 2010 after Fu approached him with an offer to work for the second defendant. The first defendant joined the second defendant in or about October 2011 and left the second defendant’s services in May 2013. In the course of his dealings in the electronics industry, the first defendant became acquainted with one Leau Swee Yong (“Leau”) in or around late 2010.

The third defendant is based in Batam Island and its business includes the supply of chips. The company’s managing director is one Suprianos.

According to Huang, she was approached by Leau in or about 25 August 2011. Leau offered to provide the plaintiff with chips. However, because Leau travelled very often, he requested Huang to contact his partner, who was the first defendant.

Huang contacted the first defendant and on 17 November 2011, the plaintiff signed its first contract for US$14,208 (“the first contract”) with the second defendant to purchase chips. Huang claimed she was told by the first defendant that he was the sole owner of the second defendant. The first contract was fulfilled without problems.

On 7 February 2012, the plaintiff signed a second contract with the second defendant to buy chips. This second contract was for US$33,000 and US$10,070 (“the second contract”) and was made after the first defendant had allegedly represented to Huang that the goods were new, there was a warranty period of one year on the goods, and the chips could be returned if they had a quality problem. Huang alleged that the plaintiff received goods only for the order for US$10,070 but not that for US$33,000.

Huang claimed that the first defendant then agreed to refund the plaintiff its payment of US$33,000. However no refund was made. Instead, Huang alleged that the first defendant agreed to deduct the sum of US$33,000 from the next batch of chips ordered by the plaintiff.

When the plaintiff received the chips under the second contract for US$10,070, Huang discovered they were imitations. She claimed that this was confirmed by tests carried out for the plaintiff by China Electronic Component Center Laboratory (“China Lab”) in Shenzhen in January 2013. The plaintiff then discovered that the first defendant did not own the second defendant but was only its employee.

Notwithstanding Huang’s discovery, on 11 July 2012, the plaintiff entered into a contract with the third defendant to purchase chips in the sum of US$2,240,000.00 (the “11 July contract”). In Huang’s affidavit of evidence-in-chief (“AEIC”) she deposed that the contract sum was US$3,344,400.00 of which the plaintiff paid US$2,500,206.00. Neither figure is reflected in any particular contract. Huang alleged that the first defendant had guaranteed that the plaintiff would receive the goods contracted from the third defendant and had reassured her that the sum of US$33,000 paid under the second contract would be set off against the purchase price under the 11 July contract. She alleged that the first defendant had informed her that he owned the third defendant. As in the case of the first defendant’s ownership of the second defendant, she said this information turned out to be false.

I should point out that it was only in the course of her cross-examination did Huang explain that the plaintiff’s claim was for all the payments it had made to the defendants, not only under the 11 July contract but under various other contracts as well.

The goods under the 11 July contract, as well as four other contracts, which were not made with the third defendant but with another Indonesian company called PT Mega Aero Engineering (“Mega Aero”), were delivered to the plaintiff on 2 November 2012. According to Huang, the goods were all fake. The plaintiff contacted the first defendant and he said he would find out from his Indonesian counterparts what happened.

By this time, Huang decided she would pay a visit to the first defendant. Huang arrived in Singapore on 7 November 2012. She met the first defendant who came to pick her up at the airport. The first defendant helped her to check into a hotel. On the morning of 8 November 2012, Huang met the first defendant at his office (the “8 November meeting”). She alleged that the first defendant (who denied it) agreed to refund all the plaintiff’s payments and on the day itself, he agreed to pay US$374,000.00. The first defendant further promised to return US$2,159,206.00 to the plaintiff the following day.

As proof of her allegation, Huang exhibited in her AEIC (at HHY-1) a note handwritten by the first defendant. The note states:-

We will transfer a total of $2159206 USD to Saoig International Limited (Ms Annie Huang) on Friday sent over T/T receipt. Will T/T $374,000 USD today.

MEGA MANDIRI BATAM

Heliyanto (signed).

The court will henceforth refer to the handwritten note as “the settlement agreement”. In cross-examination, Huang explained that for the purpose of US dollar remittances, the Hong Kong company called Saoig International Limited was used by the plaintiff as it has a US$ account.

On the afternoon of 8 November 2012, Huang received from the first defendant a copy of his remittance request to CIMB Bank (“the remittance request”) for the sum of US$374,000.00. However she subsequently discovered that the remittance request was never processed.

Unbeknownst to the first defendant, Huang had recorded what transpired at the 8 November meeting. She produced the transcript at the trial (as part of her exhibit HHY-1). Huang deposed that the audio-recording confirmed that the first defendant did not deny what he had done and that he had agreed to return the plaintiff’s monies.

She added that the first defendant had made a telephone call to someone in the midst of their conversation to impress upon her that he was indeed making arrangement to return the plaintiff’s monies.

The pleadings

The plaintiff commenced this suit in April 2013. Its statement of claim pleaded (at paragraph 4) that the first defendant agreed to supply the plaintiff chips at the price of US$2,533,206.00 and the first defendant had requested that US$33,000.00 therefrom be paid to the second defendant with the balance (US$2,500,206.00) paid to the third defendant. In paragraph 6 of the statement of claim, the plaintiff gave a breakdown of its claim for US$2,533,206.00. The claim related to nine contracts, beginning with the first contract for US$33,000.00, which was made with the second defendant. The remaining eight contracts, with the last contract being an order for US$50,000.00 on 31 September 2012, were all placed with the third defendant.

In addition to the allegation that the goods supplied by the defendants were fake, the plaintiff also alleged that the goods were not brand new and were not in original packaging. The plaintiff asserted that the first defendant had made fraudulent misrepresentations which entitled the plaintiff to repudiate the contracts under s 2 of the Misrepresentation Act (Cap 390, 1994 Rev Ed). The plaintiff asserted that it rescinded the contract in or about October 2012 and had demanded return of the sums paid of US$2,533,206.

At this juncture, I should point out that the plaintiff’s claim in misrepresentation is now academic as, it had stated in its opening statement (at paragraph 4) that it was not pursuing that head of claim and was relying solely on the settlement agreement.

The plaintiff alleged that on 11 November 2012, the first defendant had agreed to refund the total sum of US$2,533,206 to the plaintiff. The plaintiff relied on the settlement agreement as evidence of the first defendant’s promise to return US$374,000 that day and the balance of US$2,159,206 subsequently. Despite the first defendant’s promise, the plaintiff did not receive either sum subsequently or at all.

The plaintiff claimed the sum of US$2,533,206.00 from the first defendant and in the alternative, the sums of US$33,000 and US$2,500,206.00 from the second and third defendants respectively. The plaintiff obtained judgment in default of appearance against the second defendant for US$33,000 with interest and costs by an order of court dated 3 October 2013. However, it has not to-date served the writ of summons and statement of claim on the third defendant.

In his defence, the first defendant asserted that he did not contract with the plaintiff in his personal capacity. As for the second contract’s order for US$33,000, he acted as representative and/or agent of the second defendant of which he was an employee at all material times. Furthermore, the chips supplied under this order were...