Swiss Butchery Pte Ltd v Huber Ernst

JurisdictionSingapore
Judgment Date13 August 2013
Date13 August 2013
Docket NumberSuit No 222 of 2008 consolidated with Suit No 245 of 2008 (Registrar's Appeals Nos 428 and 433 of 2012)
CourtHigh Court (Singapore)
Swiss Butchery Pte Ltd
Plaintiff
and
Huber Ernst and others and another suit
Defendant

Woo Bih Li J

Suit No 222 of 2008 consolidated with Suit No 245 of 2008 (Registrar's Appeals Nos 428 and 433 of 2012)

High Court

Damages—Assessment—Compensation and damages—Breach and post-breach losses—Continuing effect of tortious conduct post-breach

Tort—Business opportunity—Actual loss of profit or loss of chance to profit

In the judgment on liability (Swiss Butchery Pte Ltd v Huber Ernst[2010] 3 SLR 813), the first defendant (‘Ernst’) and second defendant (‘Ryan’) were found to have breached their fiduciary duties owed to the plaintiff (‘SB’), and had also engaged in a conspiracy to injure SB. Ernst, Ryan and, eventually, the third defendant (‘Andre’) embarked on a series of steps, inter alia, to injure SB. The steps included the fourth defendant (‘HB’) and the fifth defendant (‘HPL’) too. The judgment on liability was against the first to fifth defendants and was for damages to be assessed or an account for profits. SB elected for damages to be assessed before the Registrar. The assessment was heard before an assistant registrar (‘AR’). The AR awarded damages of the following amounts to SB under the following heads of claim: (a) Diversion of SB's wholesale business to HPL (‘Issue 1’): $1,907,590; (b) Diversion of SB's production operations to HPL (‘Issue 2’): $151,817; (c) Usurpation of business opportunity to operate six NTUC Fairprice Finest retail outlets (‘Issue 3’): $826,835.60; (d) Sale of SB's lorry to HPL (‘Issue 4’): $13,000. Both parties appealed against the award.

With respect to Issue 1, the experts of SB and the defendants had applied a multiplicand to a multiplier and arrived at their respective opinions on the quantum of damages. The multiplicand was itself derived from various components. The multiplier was described as the time period of the claim for damages. SB's expert found that based on historical data, the reasonable period of the effects of the diversion was five years. The defendant's expert considered Ernst's breach period as nine months, from April 2007 to January 2008 (when his services were terminated by SB). Following that, there was a post-breach period that would take into account the continuing effect of the breaches. He also took into account the fact that Ernst could legitimately compete with SB after he ceased to be Managing Director and a Director of SB. Using the case of MFM Restaurants Pte Ltd v Fish & Co Restaurants Pte Ltd[2011] 1 SLR 150 (‘MFM’) as a guide, the defendant's expert was of the view that the post-breach period should be 12 months. As the continuing effect would taper off over the 12 months, he used the average of six months as the post-breach period. He was of the opinion that the total of the breach and post-breach periods was therefore nine+sixmonths=15 months.

With respect to Issue 2, SB ceased its wholesale and production operations in March 2007. These operations were taken over by HPL. A mincing machine was sold by SB to HPL due to the halt of the operations. SB claimed for the loss of profit from retail customers arising from the diversion of production operations for the period that operations were halted. The defendants alleged that there was no loss caused by the diversion as SB was in possession of a small table top mincer which was sufficient for SB to operate production operations for its retail business. In any case, even if SB did suffer damages, the damages claimed would be set-off by the profits from the sale of products bought from HPL.

With respect to Issue 3, in the judgment on liability, Ernst was found to have usurped the business opportunity for SB to open an NTUC Fair Price Finest's Bukit Timah Plaza (‘BTP’) outlet. SB claimed that it would have taken up the opportunity from NTUC Fairprice to operate the BTP outlet had Ernst not usurped the opportunity. Subsequently, between July 2008 to April 2010, NTUC Fairprice offered outlets at five other NTUC Fair Price Finest's locations which SB said would have been offered by NTUC Fairprice to it if SB had been operating the BTP outlet. SB's claim was for damages for the initial period to operate and an option to extend for both the BTP outlet and the other five outlets. The AR awarded damages for the actual loss of profit for the BTP outlet and the loss of profit arising from the loss of chance to operate five other outlets with NTUC Fairprice. In order for SB to succeed in its claim for the actual loss of profits for the BTP outlet, it had to first establish on a balance of probabilities that it would have taken up the opportunity to operate the BTP outlet. If it succeeded, it would then have to establish:

  1. (a) whether SB lost the chance to operate the five outlets and to make a profit;

  2. (b) what the quantification of the loss of chance should be; and

  3. (c) what the profit would be.

With respect to Issue 4, in the judgment on liability, the court had found that the sale of the lorry to HPL was unjustified as it was part of the plan for the divestment of SB's operations to HPL. SB claimed a loss of $14,000 arising from the sale of the lorry at an undervalue to HPL. The defendant's contested SB's expert assessment of the lorry.

Held, varying the Registrar's assessment in part:

(1) With respect to Issue 1, even though Ernst's employment as managing director and his directorship were terminated in January 2008 and his breaches and conspiracy had ceased then, the effect of his conduct (and those of the other defendants) or the advantage he had obtained did not cease immediately. This was referred to as the continuing effect. The application of MFM to define a breach period and post-breach period was not confined to cases of breaches of contract. The purpose of the division was to take into consideration the point that the effect or the consequence of a tort might not cease immediately, even when the tort had ceased: at [36] , [40] and [42] .

(2) Counsel for SB had misinterpreted MFM, and what [18] of MFM meant was that the plaintiff there had not calculated the breach period accurately and therefore each duration of the alleged breach period and of the post-breach period was inaccurate. Notwithstanding the inaccuracy, the CA proceeded to apply the descriptions ‘breach period’ and ‘post-breach period’: at [43] and [44] .

(3) The submission that post-breach factors would be relevant only for the question of mitigation was rejected. The court could not disregard the fact that Ernst could and did validly compete with SB after the date of Ernst' termination of employment at SB. Both the AR and SB's expert had omitted to take into account the fact that Ernst was not bound by any restraint of trade provision and could and did legitimately compete with SB after the date of termination: at [50] to [53] .

(4) SB's wholesale customers formed a small pool of identifiable customers unlike the general public in MFM. It would not take long for the new management of SB to try and win back the custom of such diverted wholesale customers. Also, the continuing effect of the breaches would not be consistently strong throughout the post-breach period. At the same time, the defendants had an additional advantage as Ernst had in fact already diverted the wholesale business even before he left SB. In the light of that advantage, a six-month post-breach period, rather than a three-month period, was fair. Therefore, a total multiplier of 15 months (being nine and six months for the breach and post-breach periods respectively) was adopted. As such, $509,922 was awarded as damages for Issue 1: at [7] and [55] to [58] .

(5) With respect to Issue 2, Ernst admitted that irrespective of the capacity of the tabletop mincer, SB bought sausages and cold-cuts from HPL which indicated that the tabletop mincer was not sufficient for SB's retail business. The argument of set-off was not accepted as this was not raised by the defendant's expert and the purchases from HPL were unconnected to the diverted production facilities. As the gross profit margin was reduced in Issue 1's multiplicand, SB's expert's opinion that SB had suffered damages was reduced from $151,817 to $135,682: at [60] , [63] and [67] .

(6) With respect to Issue 3, SB had proceeded on the basis that it would have taken up the BTP outlet opportunity. It also proceeded on the basis that it would have operated the other five outlets as well if those five outlets were offered to it. Though Ernst was found liable to have usurped the opportunity of operating the BTP outlet, this did not necessarily mean that SB would have taken up that opportunity had Ernst informed the other shareholders of SB about it: at [72] .

(7) In order for SB to succeed in its claim for the actual loss of profits for the BTP outlet, it had to first establish on a balance of probabilities that SB would have taken up the opportunity to operate the BTP outlet. If it succeeded, it would then have to establish that the BTP outlet would have made a profit and the quantum of the profit: at [77] .

(8) The most important evidence against SB on the question of whether it would have taken up the opportunity to operate the BTP outlet was that it did not take any step to contact NTUC Fairprice soon after the other shareholders had learned that HPL was operating an outlet at NTUC Finest at BTP. There was further evidence that SB was not keen on the opportunity and would not have taken it up before 2009: at [85] , [87] to [90] , [94] and [96] .

(9) Regarding the other five outlets, SB's premise was that if it had operated the BTP outlet, it would have been offered the opportunity to operate the other five outlets as the incumbent. Since its claim for the BTP outlet had failed, it was not necessary to decide (a) whether it lost the chance to operate the five outlets and to make a profit; (b) what the quantification of the loss of chance should...

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3 cases
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    • Singapore
    • Court of Appeal (Singapore)
    • 4 Septiembre 2013
    ...1076 (refd) Singapore Airlines Ltd v Tan Shwu Leng [2001] 3 SLR (R) 439; [2001] 4 SLR 593 (refd) Swiss Butchery Pte Ltd v Huber Ernst [2013] 4 SLR 381 (refd) Tan Siew Bin Ronnie v Chin Wee Keong [2008] 1 SLR (R) 178; [2008] 1 SLR 178 (refd) Tan Yu Min Winston v Uni-Fruitveg Pte Ltd [2008] 4......
  • AOD (a minor suing by his litigation representative) v AOE
    • Singapore
    • High Court (Singapore)
    • 20 Octubre 2015
    ...392 at [10] and [22]. Indeed, both parties helpfully brought the case Swiss Butchery Pte Ltd v Huber Ernst and others and another suit [2013] 4 SLR 381 to this court’s attention, where the High Court did recall witnesses in a Registrar’s Appeal on assessment of damages. Whilst the judge can......
  • AOD (a minor suing by his litigation representative) v AOE
    • Singapore
    • High Court (Singapore)
    • 20 Octubre 2015
    ...392 at [10] and [22]. Indeed, both parties helpfully brought the case Swiss Butchery Pte Ltd v Huber Ernst and others and another suit [2013] 4 SLR 381 to this court’s attention, where the High Court did recall witnesses in a Registrar’s Appeal on assessment of damages. Whilst the judge can......
1 books & journal articles
  • Tort Law
    • Singapore
    • Singapore Academy of Law Annual Review No. 2013, December 2013
    • 1 Diciembre 2013
    ...advertisement publicising its activities in a golf publication in Singapore. Remedies Damages 24.105 Swiss Butchery Pte Ltd v Huber Ernst[2013] 4 SLR 381 was an economic torts case. The first defendant (‘Ernst’) and the second defendant (Ryan, a son of Ernst) were found to have breached the......

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