Solomon Alliance Management Pte Ltd v Pang Chee Kuan

• Jurisdiction: Singapore
• Judge: Aedit Abdullah J
• Judgment Date: 18 June 2018
• Neutral Citation: [2018] SGHC 139
• Court: High Court (Singapore)
• Docket Number: Suit No 215 of 2015
• Year: 2018
• Published date: 23 May 2019
• Hearing Date: 17 August 2017,14 September 2017,18 August 2017,15 September 2017,16 August 2017,15 August 2017,10 August 2017,26 January 2018,11 August 2017,08 August 2017
• Plaintiff Counsel: Josephine Chong Siew Nyuk & Esther Yeo Fang Ying (Josephine Chong LLC) (instructed counsel), Lee Ming Hui Kelvin & Ong Xin Ying Samantha (WNLEX LLC)
• Defendant Counsel: Andrew Ohara (Eden Law Corporation)
• Subject Matter: Contract,Contractual terms,Rules of construction,Frustration,Restraint of trade clause,Breach,Evidence,Principles,Necessity for best evidence,Tort,Defamation,Defamatory statements
• Citation: [2018] SGHC 139

Aedit Abdullah J: Introduction

By way of an agreement dated 17 August 2009 (“the Contract”), the defendant (“the Defendant”) was engaged as an independent contractor and Vice President by the plaintiff (“the Plaintiff”) to market products promoted and sold by the Plaintiff. In this action, the Plaintiff sued the Defendant for breach of the Contract, claiming that the Defendant had diverted sales to other entities by promoting certain products on behalf of other entities. The Defendant denied the Plaintiff’s claim and in turn advanced a counterclaim for defamation.

After hearing the arguments of parties, I allowed the Plaintiff’s claim against the Defendant for breach of contract, and dismissed the Defendant’s counterclaim for defamation.

Background

The Plaintiff is a company incorporated in Singapore which is in the business of promoting, marketing and selling assets-backed investment products, including land acquisition and joint-development projects.¹

The Defendant is one of the founders of the Plaintiff, together with, amongst others, Chong Chin Fook (“Desmond Chong”), Helen Chong Kwai Leng and Goh Yam Sim who became acquainted with each other when they were employees of another company.² A day after the Plaintiff company was incorporated, the Defendant was appointed as the Vice President of the Plaintiff and an independent contractor by way of the Contract concluded between the parties on 17 August 2009. Under the Contract, the Defendant was to market certain product(s) promoted, marketed and sold by the Plaintiff according to terms and conditions stipulated in the Contract.³

Sometime in 2014, Desmond Chong suspected that the Defendant was diverting business to other entities and engaged the services of a private investigation company (“the private investigation company”). The private investigation company deployed one Loke Yoke Fun (“the Private Investigator”) to meet with the Defendant under the pretext of being interested in purchasing certain products.⁴ During the meetings between the Defendant and the Private Investigator, which were video-recorded, the Defendant was said to have told the Private Investigator that he was representing a company known as Megatr8 Inc Pte Ltd (“Megatr8”) and recommended the Private Investigator to consider investing in a particular product.

On 5 March 2015, the Plaintiff commenced the present suit against the Defendant. The Plaintiff claimed that in 2014, the Defendant had breached the terms of the Contract by diverting business away from the Plaintiff, in particular, by marketing products covered under the Contract on behalf of entities other than the Plaintiff, while the Contract was in force. The Plaintiff’s primary claim against the Defendant concerned a product which the Plaintiff had marketed on behalf of a company called Dolphin Capital Asia Pacific Pte Ltd (“Dolphin Capital”) (“the Dolphin Product”).⁵

On the basis of the alleged diversion, the Plaintiff suspended the Defendant by way of a letter dated 4 March 2015 signed by Desmond Chong (“the Suspension Letter”). On or about 6 March 2015, the Plaintiff also sent a letter to 107 recipients with the heading “change of servicing consultant” (“the letter dated 6 March 2015”).⁶ The content of the letter dated 6 March 2015 is the subject of the counterclaim by the Defendant against the Plaintiff for defamation. The Defendant also joined Desmond Chong as a defendant to the counterclaim.

In Chong Chin Fook v Solomon Alliance Management Pte Ltd and others and another matter [2017] 1 SLR 348, the Court of Appeal granted Desmond Chong conditional leave under s 216A of the Companies Act (Cap 50, 2006 Rev Ed), permitting him to control the conduct of the present suit on behalf of the Plaintiff subject to certain conditions imposed by the Court of Appeal (at [96]).

The main issues in this suit included whether products other than that listed under Schedule A of the Contract fell within the scope of the Contract, whether the Contract had been terminated or frustrated, whether the relevant terms in the Contract were unenforceable for being in unreasonable restraint of trade, and whether the Contract had been breached. The Defendant argued, inter alia, that the Contract was frustrated in March 2012 when the sale of the sole product listed under Schedule A of the Contract had ceased. The Plaintiff on the other hand argued, amongst others, that the scope of the Contract was not limited only to the product listed under Schedule A, and that the Contract continued to operate between the parties even after March 2012.

Summary of the Plaintiff’s case

The Plaintiff argued that the Contract was not limited to the single product listed under Schedule A, ie, the Villages of Aina Le’a (“the Villages Product”), but covered other products which the Defendant was appointed to market on behalf of the Plaintiff. Therefore, the Contract was not discharged when the sale of the Villages Product ceased, and instead continued in operation after March 2012. The Contract had been breached by the Defendant given that he had promoted products sold by the Plaintiff on behalf of other entities, and in this regard breached the non-compete clauses in the Contract, which were valid restraint of trade clauses.

The proper interpretation of the Contract

The Plaintiff argued that its interpretation of the Contract as covering other products aside from the Villages Product was supported by the text, in particular cll 1, 10(a), and 10(c) of the Contract.⁷

The Plaintiff also submitted that the context likewise supported its interpretation. The fact that Schedule A had included only one product was understandable since at the time the Contract was concluded, the Villages Product was the only product being marketed by the Plaintiff. Its interpretation was also supported by the fact that the Defendant had sold other products on behalf of the Plaintiff even before March 2012, which is the relevant period in which the sale of the Villages Product came to an end and at which the Defendant claimed the Contract had been discharged.⁸

In addition, that the Defendant sent an email to the directors of the Plaintiff dated 20 October 2014 (“the October 2014 email”) which he claimed constituted notice of termination under cl 5 of the Contract showed that the Defendant himself acted based on the understanding that the Contract continued to be in operation even after March 2012.⁹ It was also argued that while other agreements which the Plaintiff had entered into with other independent contractors had been updated to include new products, this did not point against the interpretation put forward by the Plaintiff as a plausible explanation for this had been provided by Desmond Chong, ie, the administrative challenge in having all of the agreements updated.¹⁰ The Plaintiff also argued that its interpretation of the Contract accorded with commercial common sense.¹¹

No frustration of the Contract

The Plaintiff submitted that there was no discharge of the Contract by frustration as there had been no supervening event which rendered the contractual obligation radically or fundamentally different from what the parties had agreed. The cessation of the sale of the Villages Product was not a supervening event leading to frustration of the Contract as it was an event which was within the contemplation of the parties.¹²

Restraint of trade clause valid

According to the Plaintiff, the restraint of trade clauses in the Contract should be upheld given that the clauses (a) were intended to protect the Plaintiff’s legitimate proprietary interests, and (b) were reasonable between the parties and also from the perspective of the interests of the public.¹³ The relevant legal test for upholding the restraint of trade clauses was thus satisfied.

Breach of the Contract

The reports from the private investigation company as well as the video recordings and transcripts of the meetings between the Defendant and the Private Investigator should be admitted. The Defendant’s objections to the admissibility of the video evidence was without foundation and incomprehensible given that he agreed that it was accurate. In particular, no suggestion was made by the Defendant that any deficiencies in the video evidence, for example, short skips in the recordings, would if corrected assist the Defendant in putting what had been captured in the videos in proper context.¹⁴

The evidence from the Private Investigator showed that the Defendant had breached the Contract by diverting business away from the Plaintiff. In particular, the evidence showed the Defendant telling the Private Investigator that he represented Megatr8, and recommending the Dolphin Product to the Private Investigator. The Defendant’s version that he had deliberately lied to the Private Investigator as he had suspicions about her was unbelievable and a change from the version of events that he had provided before he discovered the Plaintiff’s possession of the video evidence.¹⁵ His evidence about what happened was also inconsistent and not supported by what was shown in the video recordings.¹⁶

There was also other evidence of diversion. First, the contract signed by the Private Investigator was between the Private Investigator and Dolphin Capital through Shenton Wealth Holdings Pte Ltd (“SWH”). While this fact itself was not conclusive as the standard practice was that SWH would notify the Plaintiff of the sale within one or two days thereafter, this procedure was not adhered to in relation to the contract signed by the Private Investigator.¹⁷ In addition, the Defendant had shown the Private Investigator a brochure that had Megatr8’s logo on it.¹⁸ There was also evidence that the diversion of business to Megatr8 was in the order of $10 million, which was the figure that the Defendant had himself represented to the Private Investigator as having raised for Megatr8.¹⁹ The fact that...