Trane US, Inc and Others v Kirkham John Reginald Stott and Others

• Jurisdiction: Singapore
• Judge: Tay Yong Kwang J
• Judgment Date: 26 December 2008
• Neutral Citation: [2008] SGHC 240
• Court: High Court (Singapore)
• Published date: 26 December 2008
• Year: 2008
• Plaintiff Counsel: Niru Pillai (Niru & Co)
• Defendant Counsel: Chelva Rajah, SC and Chew Kei-Jin (Tan Rajah & Cheah)
• Subject Matter: Civil Procedure,Courts and Jurisdiction
• Citation: [2008] SGHC 240

26 December 2008

Tay Yong Kwang J:

The plaintiffs’ claim

1 The first plaintiff is a company incorporated in the State of Delaware, USA. It carries on the business of providing air conditioning systems and services under the Trane name (“Trane products”). The first and the second plaintiffs are wholly-owned subsidiaries of American Standard Companies Inc. The third plaintiff, a wholly-owned subsidiary of the second plaintiff, is a company incorporated in the State of Delaware, USA and is a provider of Trane products.

2 The first defendant is a director of the second and the third defendants. He is a Singapore citizen and is a shareholder of the third defendant and a director of Amazon Investments (Singapore) Private Limited (“Amazon”), the sole-shareholder of the second defendant. The plaintiffs aver that the first defendant is the alter ego of the second and the third defendants. The second defendant is a company incorporated in Singapore carrying on the business of an investment company and of the provision of management and administrative support services. The third defendant is a trading company incorporated in Indonesia with a branch registered here.

3 On or about 15 May 1990, the first plaintiff procured the incorporation of TAC Distribution Pte Ltd (“TAC”) for the contemplated distribution of Trane products in Singapore, Malaysia, Indonesia and Brunei. On or about 23 July 1990, the first plaintiff and the second defendant entered into a shareholders’ agreement in relation to TAC (“the shareholders' agreement”), which was to be governed by Singapore law and under which the parties submitted to the non-exclusive jurisdiction of the Singapore courts. Under this agreement, TAC would distribute and sell Trane products in Singapore. Separate subsidiaries of the first plaintiff were to be incorporated for the distribution of Trane products in Malaysia, Indonesia and Brunei. Once such subsidiaries were incorporated in Malaysia and Brunei, the shareholders' agreement would cease to apply to these countries.

4 The first plaintiff would hold no less than 30% of the share capital of TAC and the second defendant would hold up to 70% of the same. Pre-emptive rights were conferred on the parties should either of them decide to divest themselves of their shareholding.

5 On or about 17 August 1990, the first plaintiff and TAC entered into a distributor agreement for TAC to distribute and sell Trane products in Singapore, Malaysia and Brunei (“the distributor agreement”). Under this agreement, TAC was appointed the first plaintiff’s exclusive authorised distributor of Trane products in these three countries. TAC’s rights under this distributor agreement were non-transferable. All trade secrets and other intellectual property rights of the first plaintiff made available to TAC could not be disclosed to third parties. Like the shareholders' agreement, the distributor agreement was also governed by Singapore law.

6 On or about 8 November 1991, the first plaintiff and TAC entered into an amended distributor agreement (“the amended distributor agreement”) which extended the territories covered by the distributor agreement to Indonesia. This agreement, which was also governed by Singapore law, had a clause which provided that the parties agreed to form a joint venture operating subsidiary in Indonesia only when it was permissible under Indonesian law for the first plaintiff’s parent company to be shareholder in such an entity (“clause B”). The plaintiffs aver that clause B was never put into effect.

7 In October 1998, the second defendant transferred its shares in TAC to the first plaintiff which then became the sole shareholder of TAC. The plaintiffs contend that by reason of this, the shareholders' agreement ceased to have effect.

8 While no Indonesian entity was formally appointed distributor, TAC sold Trane products in Indonesia with the third defendant until the first plaintiff’s acquisition of all the shares of TAC. The plaintiffs aver that the first plaintiff did not object to such an arrangement between TAC and the third defendant at that time because the first defendant was the alter ego of the second and the third defendants and the second defendant was a shareholder of TAC. They allege that the arrangement was informal and could be terminated at will by either TAC or the third defendant.

9 After the first plaintiff became the sole shareholder of TAC, the first plaintiff proposed a formal arrangement with the third defendant to appoint it directly as a non-exclusive distributor in Indonesia. In October 1999, the first plaintiff sent a draft distributor agreement between the third plaintiff and the third defendant to the first and the second defendants. This provided for a non-exclusive and non-transferable distributorship for five years to be followed thereafter by automatic one-year renewals. It could be terminated by either party upon giving 12 months’ written notice and upon termination, all proprietary information would be returned to the third plaintiff with no right to retain any copy of the same.

10 Although this draft distributor agreement was not signed, the plaintiffs regarded the third defendant as the first plaintiff’s non-exclusive distributor in Indonesia, with such distributorship renewable annually at the first plaintiff’s sole discretion. The plaintiffs contend that the informal distributorship thus created was also governed by Singapore law.

11 The first plaintiff decided not to renew the distributorship arrangement after June 2004. Any further distribution of Trane products by the third defendant thereafter was on an ad hoc basis. The plaintiffs discovered that the third defendant was also distributing a direct competitor’s (McQuay) products. By its solicitors’ letter dated 4 October 2005, the first plaintiff terminated the ad hoc arrangements with the third defendant with immediate effect with provisions for an orderly wind-down of existing orders. All outstanding arrears due from the third defendant to the first plaintiff or its related company would have to be paid within 30 days from 4 October 2005 (“the accounts receivable claim”). Under this claim, the plaintiffs the third defendant was also to return to the first plaintiff all documents, contract and material in relation to the third defendant’s list of customers for Trane products and to cease using the plaintiffs’ trade mark and logo (“the intellectual property claim”). The plaintiffs claim that the third defendant continues to use the second plaintiff’s trade mark and logo.

12 Accordingly, the first plaintiff claims a declaration that the defendants do not have any proprietary or other interests or rights in the distribution of Trane products, whether arising from the shareholders' agreement, the distributor agreement or the amended distributor agreement. The first plaintiff also seeks an injunction to restrain the defendants from commencing or continuing with any proceedings in Indonesia or elsewhere, directly or indirectly relating to the sale and distribution of Trane products or to any rights of any kind whatsoever arising out the said three agreements or otherwise, including the court action already filed in Indonesia. Under the intellectual property claim, the second plaintiff claims against the first and/or the third defendants damages and an injunction restraining them from using its trade mark and logo. The third plaintiff claims against the same defendants the sum of US$1,249,632.46 under the accounts receivable claim and an order for delivery up of its hardware and software relating to Trane products and an injunction restraining the said defendants from using such hardware and software under the intellectual property claim.

The interlocutory applications

13 SUM No. 5167 of 2007 is an application by the defendants for an order that all further proceedings in this action be stayed on the ground of forum non conveniens. This application was dismissed in circumstances which will be elaborated on later in this judgment.

14 SUM No. 5248 of 2007 is an application by the first plaintiff for an order that the defendants be restrained from commencing or continuing with the court proceedings in Indonesia (Majlis Hakim Perkara No. 804/Pdt.G/2007/PN.Jak.Sel) or elsewhere, directly or indirectly relating to the sale, distribution or dealings in Trane products or relating to any rights of any kind whatsoever arising out the shareholders' agreement, distributor agreement and/or the amended distributor agreement or otherwise, pending the trial of the present action or until further order. I granted the order sought subject to the usual undertaking as to damages.

15 SUM No. 5249 of 2007 is an application by the first and the second plaintiffs for an order that the first and/or the third defendants deliver up within 14 days the materials under the intellectual property claims, that they be restrained from using the same and the second plaintiff’s trade mark and logo directly or indirectly pending trial of this action or until further order and from holding themselves out as being authorised to represent Trane products. This application was granted on the basis that the intellectual property sought be delivered up to the defendants’ solicitors as stakeholders pending appeal. The circumstances leading to this order will also be explained subsequently.

16 By consent, SUM No. 5248 of 2007 was heard first out of the three applications listed above. This application was heard in the afternoon after two other applications by the parties (SUM No. 5624 of 2007 and SUM No. 2258 of 2008) were heard and dealt with in the morning. As the hearing lasted until 6.45pm that day, SUM No. 5167 of 2007 and SUM No. 5249 of 2007 were adjourned and heard on another day.

The plaintiffs’ arguments in SUM No. 5248 of 2007

17 This is essentially an application for an anti-suit injunction to restrain the defendants from proceeding with the...