Swiss Butchery Pte Ltd v Huber Ernst and others and another suit

• Jurisdiction: Singapore
• Judge: Woo Bih Li J
• Judgment Date: 13 August 2013
• Neutral Citation: [2013] SGHC 151
• Court: High Court (Singapore)
• Docket Number: Suit No 222 of 2008 consolidated with Suit No 245 of 2008 (Registrar’s Appeal No 428 of 2012 and No 433 of 2012)
• Year: 2013
• Published date: 02 October 2013
• Hearing Date: 24 April 2013,01 July 2013,09 May 2013,14 November 2012,29 January 2013,29 April 2013,26 July 2013,30 April 2013,30 January 2013,28 January 2013,01 March 2013
• Plaintiff Counsel: Hee Theng Fong and Clare Lin Ying (RHTLaw Taylor Wessing LLP)
• Defendant Counsel: Johnny Cheo (Cheo Yeoh & Associates)
• Subject Matter: 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
• Citation: [2013] SGHC 151

Woo Bih Li J:

This matter concerns two appeals (the “Appeal”) – Registrar’s Appeal No 433 of 2012 (“RA 433”) by the plaintiff and Registrar’s Appeal No 428 of 2012 (“RA 428”) by the defendants against an Assistant Registrar’s (the “AR”) decision on the assessment of damages for Suit No 245 of 2008 (“Suit 245”) which was consolidated with Suit No 222 of 2008 (“Suit 222”).

Background

I will now set out a summary of the facts and judgment on liability that I gave for Suit 245. The plaintiff Swiss Butchery Pte Ltd (“SB”) was in the business of retail and wholesale butchery and production operations at 30 and 32 Greenwood Avenue (“Greenwood Avenue”). In Suit 245, SB and two of its directors, Wong Chow Kim (“Alex”) and Foo Chee Tan (“Don Foo”), claimed against the first defendant, Huber Ernst (“Ernst”), and second defendant, Huber Ryan Ernst (“Ryan”), for breach of their duties as a director and an executive of SB respectively, and for the tort of conspiracy. Further, SB claimed against the other four defendants, Huber Andre Rudolf (“Andre”), Huber’s Butchery (“HB”), Huber’s Pte Ltd (“HPL”) and Thomas Norbert Kreissl (“Thomas”) for, inter alia, conspiracy and dishonest assistance. In Suit 222, Ernst claimed against the other shareholders of SB for relief under s 216 of the Companies Act (Cap 50, 2006 Rev Ed) ("Companies Act") for oppression against him as a minority shareholder. By an Order of Court dated 7 July 2008, both suits were consolidated and the trial of Suit 245 proceeded before Suit 222.

SB made numerous allegations in Suit 245 which centred around SB's allegation that Ernst diverted SB's wholesale and production operations to HPL for the benefit of Ernst and his two children, Ryan and Andre.

In my judgment, I concluded that based on my findings of fact, both Ernst and Ryan had breached their fiduciary duties owed to SB and had also engaged in a conspiracy to injure SB. After the rejection by Alex and Don Foo of Ernst's bid to obtain a majority shareholding in SB for his family in June and July 2005, Ernst and Ryan, and eventually, Andre, embarked on a series of steps, inter alia, to injure SB: Ryan incorporated HPL in September 2005 with a paid-up capital of $100,000, and Andre joined HPL in March 2006; Ernst, Ryan and Andre viewed properties for a factory outlet from January to March 2006; HPL’s paid-up capital increased to $400,000 in March 2006, with 200,000 shares to Ryan and Andre each to make HPL fully operational; HPL purchased a property at 161 Pandan Loop in July 2006 as a food factory; Ernst, Ryan and Andre took active steps from September 2006¹ to mislead employees of SB and third parties who had dealings with SB to think that SB was related to HPL in order to facilitate the divestment of some of SB's operations to HPL and to facilitate the start-up of HPL's own operations; Ernst misled NTUC FairPrice Co-operative Limited (“NTUC FairPrice”) representatives to believe that HPL and SB were related to each other and began discussions on behalf of HPL in October 2006 to set up a butchery counter at NTUC FairPrice Finest’s Bukit Timah Plaza (“BTP”) outlet thereby usurping SB’s business opportunity to operate the BTP outlet; HB, a sole proprietorship wholly owned by HPL registered on 30 May 2007, is and was at all material times in the business of retail of sale of meat, and operated the BTP outlet; and Ernst wrongfully divested SB's wholesale and production operations to HPL in March 2007 by ceasing SB’s wholesale and production operations which were then taken over by HPL.

I granted judgment against the first to fifth defendants in Suit 245 for damages to be assessed or an account for profits, with interest and costs of the assessment or accounting to be determined by the Registrar. I dismissed SB’s claim against Thomas. SB eventually elected to have damages assessed before the Registrar. As Thomas is no longer in the picture for the assessment of damages, I will refer to the first to the fifth defendants collectively as “the defendants”.

The AR awarded damages of the following amounts to SB under the following heads of claim: Diversion of SB’s wholesale business to HPL (“Issue 1”): $1,907,590. This was based on various components which I shall elaborate on later. Diversion of SB’s production operations to HPL (“Issue 2”): $151,817. Usurpation of business opportunity to operate six NTUC Fairprice Finest retail outlets (“Issue 3”): $826,835.60. Sale of SB’s lorry to HPL (“Issue 4”): $13,000.

Each side filed an appeal against that assessment. After hearing counsel and accounting experts, I decided as follows on 9 May 2013: 1. Damages from the diversion of wholesale business

1.1(a)	Time period of claim for loss of customers. There is no distinction between existing and new customers as new customers would have become existing ones in the next year.	15 months (April 2007 to June 2008)
(b)	Compounded Annual Growth Rate	18.15%
(c)	Attrition rate	20%
(d)	Base Revenue (FY 2006)	$1,813,848
(e)	Gross Profit Margin (“GPM”)	34.53%
(f)	Discount rate	13.52%
(g)	Costs to be deducted: (i) Delivery charges	3%
(ii) Staff costs and increments	To deduct Mike Tan’s salary + employer’s CPF contribution + 3 months’ bonus + 3% increment
	(iii) Packaging costs	$12,000 per annum
	(iv) Utilities	0.2%
	(v) Rental	No deduction
1.2	The experts are to compute and agree on the quantum of damages based on the components stated at 1.1 above. If they fail to agree, the quantum will be fixed by the court.

2. Damages from the diversion of production operations

This is assessed at $151,817. However, if Mr Chee agrees that this quantum should be reduced because the GPM for wholesale business has been determined by the court to be 34.53%, then the quantum of damages under this head will be reduced to the reduced amount as computed by him.

3. Damages arising from the usurpation of business opportunity (NTUC Finest outlets)

This is assessed as Nil. [Later varied to $1,000 as nominal damages].

4. Damages from the sale of a lorry from [SB] to [HPL]

This is assessed at $13,000.

5. Parties are to revert as soon as possible with the computation of the experts as stated above and provide the overall quantum which is to be confirmed by the court. 6. Liberty to apply. 7. For the avoidance of doubt, the time to file any appeal from my decision will begin to run only when the overall quantum is confirmed by the court. 8. I will hear the parties on interest and costs.

Unfortunately, the parties still could not agree on what the quantum of damages should be for Issue 1 even though I had decided on the components. It appeared from the correspondence between the solicitors of the parties that the reason for the disagreement was that SB was attempting to persuade me to vary my decision under the guise of implementing my decision. Consequently, counsel had to attend before me again on 1 July 2013 (also with experts) for the computation for Issue 1 to be resolved. At that hearing, counsel for SB, Mr Hee Theng Fong (“Mr Hee”), finally accepted the defendants’ position that based on my earlier decision on 9 May 2013, the quantum for Issue 1 should be $509,922. However, he still sought to persuade me to vary my decision on the components in which case the quantum would be $603,145. It was a pity that Mr Hee had conflated his duty to implement my decision with his desire to persuade me to vary my decision. Had he not done so, it would not have been necessary for counsel to attend before me on 1 July 2013. In any event, I decided not to vary my decision on the components for Issue 1. Hence the quantum for Issue 1 should be $509,922.

By 1 July 2013, parties had agreed that the quantum for Issue 2 should be $135,682.

Accordingly, I confirmed the quantum to be:

(a)	Issue 1	$509,922
(b)	Issue 2	$135,682
(c)	Issue 3	(Nil)
(d)	Issue 4 (which had already been decided on 9/5/2013)	$ 13,000
Total:	$658,604

I also delivered my oral judgment on costs and interest on 1 July 2013. However, on 26 July 2013, I varied my decision on Issue 3 to $1,000, making the total $659,604 instead because I was of the view that SB should be granted nominal damages of $1,000 instead of nothing for Issue 3.

SB has filed an appeal against my decision in respect of Issues 1 and 3. I set out my reasons for my substantive decision below.

Issues on Appeal before me

SB had appealed against the damages awarded for Issue 3, while the defendants had appealed against the damages awarded under all the heads. Before I deal with each head of claim, I will set out the law on assessing damages for tort.

Assessment of damages for Torts

The tort of conspiracy is part of a broader category of economic torts. It is an intentional tort in respect of economic interests. In tort, the purpose of damages is to put the claimant back into the position in which he would have been, if the tort had not been committed. It is a compensation for loss and was first stated by Lord Blackburn in Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 (“Livingstone”). This is trite law as seen in McGregor on Damages (Sweet & Maxwell, 18th Ed, 2009) (“McGregor on Damages”) at 1-023, and was reiterated in the Court of Appeal decision of Wishing Star Ltd v Jurong Town Corp [2008] 2 SLR(R) 909; [2008] SGCA 17 (“Wishing Star”) at [28]. On the other hand, damages for breach of contract, are to put the claimant in the same position he would have been if the contract had been performed, see McGregor on...