Singapore River Cruises & Leisure Pte Ltd v Phun Teow Kie and Another

• Jurisdiction: Singapore
• Judge: Lee Seiu Kin JC
• Judgment Date: 06 January 2000
• Neutral Citation: [2000] SGHC 2
• Docket Number: Suit No 279 of 1998
• Date: 06 January 2000
• Year: 2000
• Published date: 19 September 2003
• Plaintiff Counsel: Toh Kok Seng and Raphael Lee (Lee & Lee)
• Citation: [2000] SGHC 2
• Defendant Counsel: Jeffrey Sim (Chui Sim Goh & Lim)
• Court: High Court (Singapore)
• Subject Matter: Duties,Employee's fiduciary duty to employer,Whether family member owed fiduciary duties to family company,Employees’ duties,Equity,Whether family member owed fiduciary or contractual duties to family company,Fiduciary relationships,Whether family member breached fiduciary duties in securing contract,Whether family member breached fiduciary or contractual duties in securing contract,Family member helping family company but securing contract for his own company,Employment Law

: The plaintiffs are a company in the business of providing river cruises and similar services along the Singapore River. In this action, the plaintiffs seek damages from the first defendant, Phun Teow Kie (`Phun`), arising from breaches of contractual or fiduciary duties as an employee in securing a contract from Clarke Quay Pte Ltd (`CQ`) for the second defendants that he ought to have secured for the plaintiffs. The plaintiffs` claim against the second defendants is an account for profits obtained by them under the contract with CQ as a constructive trustee.

On 20 September 1999, after the trial of the matter and hearing submissions from counsel, I dismissed the plaintiffs` claims against both defendants with costs. On 11 October 1999 the plaintiffs appealed against my decision and I now give my grounds.

Background

The plaintiffs were originally known as Lian Hup Choon Marine Private Limited. The company was incorporated by Png Yiow Beng (`Png`) and his younger brother, Phun Yeow Cheng (`Yeow Cheng`) on 25 October 1983. Prior to this, their father operated a boating business along the Singapore River and harbour. Png and Yeow Cheng had helped him with it and learnt the ropes in this business. On 25 October 1990, the plaintiffs` name was changed to the present one.

Initially the plaintiffs` business was the conveyance of seamen and workers from Clifford Pier to ships anchored at port. The 1987 Miss Universe Pageant was held in Singapore from 28 April to 27 May. The plaintiffs supplied boats for ferrying the contestants along the Singapore River. The event was a success and the Singapore Tourist Promotion Board (`STPB`) presented the plaintiffs with a certificate of appreciation for their efforts. In July 1987, STPB awarded the plaintiffs a contract to operate boating activities on the river for the purpose of leisure or conveyance of passengers. For this purpose the plaintiffs were assigned a landing point at North Boat Quay, which is located behind Parliament House.

With this STPB contract, the plaintiffs embarked on an expansion plan. Four new shareholders were brought in. One of them was Phun, who is the youngest brother of Png and Yeow Cheng. He invested $25,000 which comprised 10% of the share capital. Another investor was their maternal uncle, Ong Say Hock (`Ong`), who also invested $25,000.

Sometime in mid-1988, Phun joined the plaintiffs as an employee. He was given the title of Marketing Manager with an initial monthly salary of about $1,600. There was no written contract of employment. Five years later, in a letter to STPB dated 2 December 1993, Png writing as the plaintiffs` managing director, informed them that the plaintiffs had decided to `dismiss` Phun, that is to say, terminate his employment. However there was no written letter of termination, nor was there any other form of communication to Phun to this effect. I now turn to the evidence of the events during Phun`s employment that led to the dispute in this sorry family saga.

Plaintiffs` version of events

Png was the principal witness for the plaintiffs and his evidence was as follows. Sometime in mid-1988 Phun approached him and asked to be employed by the plaintiffs as he was unhappy with his job as a sales executive with Sigma Co (Pte) Ltd. Png agreed and the first defendant was given the post of Marketing Manager. Notwithstanding this title, the first defendant`s job was to assist Png in all aspects of the plaintiffs` business. Png gave him all information relating to the plaintiffs` business and paid him an initial salary of about $1,600. The first defendant`s duties included promoting and marketing the plaintiffs` services, exploring and developing business opportunities for the plaintiffs, and representing and acting for the plaintiffs in dealings with third parties. Png said that by virtue of his employment, the first defendant had a duty to serve the plaintiffs faithfully and at all times act honestly in their interests and in good faith.

Png said that his English was not good and he got Phun to assist him by attending meetings, although most of the important decisions would be made by him. Phun was entrusted with the day-to-day management of the business but he was to keep Png informed of all aspects of it. Phun would also handle correspondence with STPB and other companies. Sometime in late 1991 or early 1992 Png saw an article in the Chinese newspaper which reported that DBS Land was awarded a contract to develop Clarke Quay. Seeing this as an opportunity for the plaintiffs, he discussed this with Phun and asked him to look into it. Shortly after that, Phun reported to him that DBS Land would be using CQ as their vehicle for the development. Phun later told Png that he was in contact with CQ and that their chances of securing a contract with them for provision of river cruises and river taxi services were good. Png asked Phun to follow up with further negotiations with CQ. They had a further discussion on this on 5 February 1993. However after that, Phun did not report anything substantial to Png and when the latter asked, he would give non-committal answers, eg that negotiations were still in progress. Finally in mid-1993 Png told Phun that he had to confirm and finalise the contract with CQ as the plaintiffs needed time to build more boats and employ staff. Shortly after that, Phun informed him that CQ had decided to operate the river taxi services at Clarke Quay themselves. This came as a shock to Png who had thought all along that negotiations had gone on smoothly and the written contract was only a formality. Nevertheless he told Phun to continue relations with CQ as there may be other opportunities in future.

On 22 November 1993, Png was asked to attend a meeting with the STPB Senior Director of Development, one Mrs Lee. The meeting commenced at 2. 30pm. Png said that at first Mrs Lee discussed `mundane matters` with him. After a while, she asked one of her colleagues, Mr Chong, why Phun was not there yet. This was when Png discovered that Phun was also invited to the meeting. Mr Chong informed Mrs Lee that Phun had come to the office but as he approached her room, he turned around and left. Png noticed that the door to Mrs Lee`s room was ajar and Phun would have been able to see him from the outside. Mrs Lee decided to proceed with the meeting. She asked if the plaintiffs had any problems internally. This question came as a shock to Png and he answered in the negative. Mrs Lee then told him that Phun had informed her that the plaintiffs were experiencing problems and Phun therefore wanted to go off on his own to set up the second defendant company to operate river cruises and river taxi services from the Clarke Quay landing area. On hearing this, Png was at a loss because it was totally at odds with the impression that Phun had been giving him.

Immediately after the meeting Png tried to contact Phun. He paged him many times but there was no response. He also tried to locate Phun but was unsuccessful. Png began to suspect that Phun was avoiding him. He then checked at the plaintiffs` office and discovered some account books, including those for the years 1991 and 1992, missing. On 30 November 1993, he terminated the first defendant`s employment.

Sometime in 1995 Png instructed the plaintiffs` present solicitors, M/s Lee & Lee (`LL`), on this matter. LL took out an originating summons to obtain correspondence between CQ and the second defendants. From those documents Png discovered various dealings between Phun, acting on behalf of the second defendants, and CQ at the time when Phun was still employed by the plaintiffs. He also discovered that the second defendants were a company in which the two directors and shareholders were the first defendant`s fiance, Lee Nam Hong (`Nam Hong`) and her sister, Lee Swee Hong. Further, Png discovered that Phun had been using the plaintiffs` property and information in procuring the contract with CQ. On 26 February 1998 the plaintiffs filed the writ in this action.

Defendants` version of events

Phun gave a very different version of events. He said that the plaintiffs were a family company and he was brought in solely for the purpose of helping them out during a difficult patch. Even before joining the plaintiffs, he had helped them out in preparing proposals to STPB. The plaintiffs had been doing badly when Png asked him to help market the river cruises. Phun pointed out that he took a severe pay cut when he left Sigma Co (Pte) Ltd. He did not have a significant role beyond marketing. He was certainly not a director of the company. After joining the plaintiffs in September 1988, Phun had helped to steer the plaintiffs towards a profitable performance.

It turns out that Png and Phun were at the material time involved not just in the plaintiffs. In 1990 and 1991, the two brothers formed at least three companies, namely, Far East Maritime (S) Pte Ltd, United Far East Corporation (S) Pte Ltd and Coslink (Singapore) Pte Ltd. They were both directors and shareholders in them. However by late 1991 their relationship became strained. This was because Phun accused Png of misappropriating various funds, as follows:

(i) the takings of the plaintiffs during the 1990 and 1991 Hong Bao festivals;

(ii) the funds and assets of Far East Maritime (S) Pte Ltd;

(iii) money belonging to a company called GPI Maritime (Singapore) Pte Ltd (`GPI`);

Phun said that there was also another incident which strained their relationship. Png had diverted a stevedoring contract from GPI to his own company AG Management (S) Pte Ltd. This was discovered and the contract was revoked and taken over by a company called Dick Tai Corporation Pte Ltd in which Phun was a shareholder.

Because of these incidents, by 1992 the brothers were virtually openly quarrelling with each other. Phun said that two...