Sim Leng Chua v Interfood Ltd and Another

• Jurisdiction: Singapore
• Judge: Punch Coomaraswamy J
• Judgment Date: 22 September 1992
• Neutral Citation: [1992] SGHC 249
• Court: High Court (Singapore)
• Published date: 22 March 2013
• Year: 1992
• Plaintiff Counsel: Harry Elias (Harry Elias & Partners)
• Defendant Counsel: Patrick Milmo, QC and Margaret Neo (Joseph Hoo Morris & Kumar),Jeffrey Beh (Y M Jumabhoy & Co),Tan Jin Chor from Kuala Lumpar (watching brief
• Citation: [1992] SGHC 249

Judgment:

Coram: Punch Coomaraswamy, J

J U D G M E N T

Interfood Ltd ("Interfood") is a company incorporated in Switzerland with a place of business in Lausanne, Switzerland. They are the owners and the licensors in various countries of the trademarks "Sugus" and "Suchard" which are used for confectionery manufactured and packaged in accordance with Interfood's proprietary specifications and designs.

Sometime in 1978, a Malaysian company, Khee San Food Industries Sdn Bhd ("Khee San") became interested in securing a concession from Interfood for the manufacture and sale of Sugus confectionery in Malaysia, Singapore and elsewhere.

In April that year, following a discussion between Yan Kok Hian ("Yan"), a director of Khee San and Sim Leng Chua ("Sim") and a company known as Scheidegger Trading Company Pte Ltd ("Scheidegger Trading Company"), the latter two were jointly appointed as Khee San's agents to find, negotiate and secure the aforesaid concession from Interfood. In return, Khee San promised to pay Sim and Scheidegger Trading Company each a commission amounting to 3% of the net sales of Sugus confectionery manufactured and sold under the concession. The agreement is evidenced in writing by a letter dated 24 May 1978 ("Agreed Bundle Vol 2 page 45" or AB 2-45) and subsequently formalized in a written agreement dated 30 July 1979 (AB 3- 121)("Sim-Khee San agreement").

Sim accordingly intermediated between Interfood and Khee San, resulting in a series of agreements between Interfood and Khee San as follows:- First, by a written agreement dated 25 September 1978 ("the Malaysia Licence Agreement"), Interfood granted Khee San an exclusive and non-assignable licence to manufacture and sell Sugus and Suchard products in Malaysia. Next, by a written agreement dated 23 May 1980 (AB 6-303A)("the Taiwan Licence Agreement"), Interfood granted Khee San an exclusive and non-assignable licence to manufacture and sell Sugus products in Taiwan, including a qualified right to grant a sub-licence to a manufacturing company to be set up in Taiwan.

According to Sim, the Taiwan Licence Agreement was part of a larger agreement committing Sim, Khee San and Interfood to a joint-venture project for the manufacture and sale of Sugus products in Taiwan which was entered into orally between all three parties in April and May 1980. ("The Taiwan Joint Venture Agreement") by which -

(a) Interfood would enter into the Taiwan Licence Agreement with Khee San; (b) Khee San would then enter into a sub-licence agreement with a manufacturing company to be set up in Taiwan; (c) Sim would take up 20% of the shareholding of the proposed manufacturing company; (d) Interfood would render technical assistance and co- operation in the Taiwan joint venture project in consideration of the payment of royalty of 6.5% of the net sale of Sugus products in Taiwan; and (e) a letter of undertaking and guarantee would be given by the shareholders of the proposed manufacturing company (including Sim) agreeing to be bound by the terms and conditions of the Taiwan Licence Agreement to be entered into between Interfood and Khee San.

According to Sim, it was pursuant to the Taiwan Joint Venture Agreement between Sim, Khee San and Interfood that the Taiwan Licence Agreement was entered into between Interfood and Khee San. Furthermore, according to Sim, pursuant to the Taiwan Joint Venture Agreement or alternatively in reliance on Interfood's promise to render technical assistance and co-operation in the Taiwan joint venture project, Sim took up 20% of the shareholding of the proposed manufacturing company. According to Sim, it was through his effort and expense that the proposed manufacturing company was set up and named Swisstons Food Industries Ltd ("Swisstons"). By a letter of undertaking dated 14 December 1981, he and the other shareholders of Swisstons agreed with Interfood to be bound by the terms of the Taiwan Licence Agreement between Interfood and Khee San.

Meanwhile, in 1979, a firm in Singapore trading as Siang Hong & Company ("Siang Hong") was interested in obtaining the right to distribute Sugus products in Singapore. In December that year, it was orally agreed between one Tay Jiat Long, on behalf of Siang Hong, and Sim that Sim would secure for Siang Hong a grant of the right of distributing Sugus products in Singapore. It was further agreed between them that Sim would invest funds in Siang Hong's business in relation to the distribution of Sugus products in Singapore. In return, Siang Hong promised to pay 3% of the value of Sugus products imported by Siang Hong from Malaysia and 60% of the profits made by Siang Hong from the sale of Sugus products in Singapore ("Sim-Siang Hong Agreement").

Through Sim's intermediation, by an oral agreement ("the Singapore Distribution Agreement"), Khee San granted Siang Hong the right to distribute Sugus products in Singapore with effect from 1 January 1980. Sim then provided funds to Siang Hong to develop Siang Hong's business in relation to distribution of Sugus products in Singapore.

On 23 May 1980 (coincidentally the date of the Taiwan Licence Agreement), a meeting took place in Kuala Lumpur between Sim and a representative of Interfood. What resulted was a letter dated 25 September 1980 (AB 7-385A). The effect of this letter is material and in dispute.

Sim says that the letter was evidence of an agreement by which he would with effect from 1 January 1981 render Interfood services as a liaison intermediary to assist Interfood in the development of their business in Malaysia and Singapore within the framework of the Malaysia Licence Agreement between Interfood and Khee San. (I would add here that all the parties seemed to have acted on the basis that the Malaysia Licence Agreement included a right to sell Sugus and Suchard products in Singapore.) In return, Interfood would pay Sim the sum of S$36,000 per annum. On the other hand, Interfood say that the agreement constituted Sim as an agent with fiduciary duties which inter alia prevented him from receiving commissions from other parties.

The agreement was for an indefinite period and was determinable by either party on the last day of any calendar year by three months' written notice.

In or around February or March 1982, Interfood became aware of the oral agreement between Sim and Siang Hong which led to the Singapore Distribution Agreement between Khee San and Siang Hong. Soon thereafter, Interfood became aware of the agreement between Sim and Khee San which led to the Malaysia Licence Agreement between Interfood and Khee San.

By way of a letter dated 29 May 1982 which was sent to Sim ("the Notice of Termination"), Interfood terminated the Sim- Interfood Agreement with immediate effect. A copy of the Notice of Termination each was sent to Khee San and Siang Hong.

According to Sim, the termination was wrongful and moreover Interfood thereby induced Khee San and Siang Hong into breaching their respective agreements with Sim. Sim also alleges that in breach of the Taiwan Joint Venture Agreement, Interfood wrote a letter dated 16 April 1982 to Swisstons' consultants informing them of Interfood's decision to withdraw from the joint venture project.

Two actions resulted from all this. In Suit No 4049 of 1982, Sim is suing Interfood for:- (a) breach of the Sim-Interfood Agreement; (b) breach of the Taiwan Joint Venture Agreement; (c) inducing Khee San to breach the Sim-Khee San Agreement; and (d) inducing Siang Hong to breach the Sim-Siang Hong Agreement.

Alternatively, Sim says that Interfood wrongfully and maliciously conspired with Khee San or Siang Hong or with both, to injure Sim in respect of his contractual rights and entitlement under his respective agreements with Khee San and Siang Hong, causing him loss and damage. Sim is also seeking specific performance of the 25 September 1980 agreement.

In Suit No 4050 of 1982, Sim is suing Siang Hong for breach of the Sim-Siang Hong Agreement.

I should add that there is also a connected action (Suit No 1956 of 1982 in the High Court of Malaysia) brought in Kuala Lumpur by Sim against Khee San, but is not relevant for reasons that follow.

Interfood are counterclaiming against Sim for the commission and profit which he had received from Khee San and Siang Hong because Interfood has alleged that Sim was Interfood's agent or owed Interfood fiduciary duties and was in breach thereof. The claim was for S$585,869.27, particularized as follows:-

Amounts received from Khee San

Date Malaysian Ringgit Exchange Rate Singapore Dollars

10 Oct 1979 12,368.80M$100.55 to S$100.00 2,300.89 11 Jan 1980 17,912.65M$101.02 to S$100.00 27,630.82 21 Apr 1980 38,923.23M$103.26 to S$100.00 37,694.15 04 Sep 1981 140,568.36M$109.26 to S$100.00 128,654.91 11 Aug 1980 48,142.20M$101.02 to S$100.00 47,655.86 15 Aug 1980 60,885.25M$105.10 to S$100.00 57,930.70 29 Apr 1981 69,092.25M$109.26 to S$100.00 63,236.32 25 Feb 1982 54,926.00M$109.85 to S$100.00 50,000.00 __________ ___________ 452,818.74 425,103.73 __________ ___________

Amounts received from Siang Hong S$ 1 1980 Sugus profit share35,647.40 2 1980 3% commission 16,379.08 3 1981 Sugus profit 73,746.50 4 1981 3% commission 18,807.12 5 1982 January & February profit5,000.00 6 1982 January & February 3% commission1,585.44 7 Two Sugus vans 9,600.00 ___________ 160,765.54 ___________

Interfood also alleges that Sim sought and induced Interfood to pay him the additional sum by way of remuneration and/or reimbursement of expenses of S$30,000 by the representation that his remuneration of S$36,000 per annum was substantially absorbed by expenses incurred on behalf of Interfood without disclosing to Interfood that Sim had received reimbursement of substantial amounts of expenses from Khee San. Interfood also alleges that on or about 1 January 1981, Sim was appointed by Schupbach Limited ("Schupbach") - who are manufacturers of, inter alia, wrapping material for confectionery - as their...