Trung Nguyen Group Corp v Trung Nguyen International Pte Ltd and others

• Jurisdiction: Singapore
• Judge: Valerie Thean JC
• Judgment Date: 21 November 2016
• Neutral Citation: [2016] SGHC 256
• Court: High Court (Singapore)
• Docket Number: Suit No 1206 of 2015 (Summons No 3356 of 2016)
• Published date: 21 March 2019
• Year: 2016
• Hearing Date: 11 August 2016,04 August 2016
• Plaintiff Counsel: Jimmy Yim SC, Erroll Ian Joseph, Mahesh Rai and Diedre Grace Morgan (Drew & Napier LLC)
• Defendant Counsel: Thio Ying Ying, Lim Yu Jia and Jolyn Khoo (Kelvin Chia Partnership)
• Subject Matter: Civil Procedure,Stay of Proceedings,Conflict of Laws,Natural Forum
• Citation: [2016] SGHC 256

Valerie Thean JC: Introduction

I granted the first and second defendants (“the Applicants”) a stay of proceedings in this action on the ground that Vietnam was the forum conveniens to determine the claim in this action. The plaintiff has appealed and I now furnish the grounds for my decision.

Facts

The plaintiff is a company incorporated under the laws of Vietnam.¹ Its Chairman and legal representative is one Dang Le Nguyen Vu (“Vu”). The plaintiff is in the business of producing, processing and distributing coffee.²

Vu and the second defendant, Le Hoang Diep Thao (“Thao”) married in Vietnam in 1998. In 1999, they set up their first café.³ Their business prospered and the plaintiff, incorporated in 2006, became the vehicle through which the business is run. The first defendant, a Singapore company incorporated in 2008, is used to supply the plaintiff’s coffee products to international clients.

Vu and Thao’s relationship began to deteriorate in 2013. In early April 2015, Thao was dismissed from her position as the permanent Vice-General Director of the plaintiff.⁴ In October 2015, Thao petitioned for divorce in the People’s Court of Ho Chi Minh City.

On 26 November 2015, the plaintiff commenced this action in Singapore.

The plaintiff’s claim

Central to this action is a dispute over the first defendant’s shares, presently held by Thao as the result of a transfer dated 15 July 2015.

In the plaintiff’s first Statement of Claim dated 26 November 2015, the plaintiff first sued the first defendant and Thao for the fraudulent transfer of shares in the first defendant and for failure to deliver certain financial and management reports due in respect of the first defendant.⁵ Subsequently, the plaintiff successfully applied to join the five remaining defendants and to amend its statement of claim to include a wider claim in conspiracy on 29 March 2016. The Amended Statement of Claim was filed and served on 13 June 2016. This stay application, together with another application for an extension of time to apply for a stay, was thereafter taken out on 11 July 2016. I gave an extension of time for the stay application on 4 August 2016 (this order is not the subject of appeal). This application was argued on the basis of the Amended Statement of Claim.

The plaintiff relied on three main allegations to support its claim in unlawful means conspiracy:⁶ an unauthorised and fraudulent transfer of the plaintiff’s 7,520,800 shares in the first defendant to Thao in July 2015; the inducement, thereafter, of the first defendant to breach its contract with the plaintiff and cause a diversion of monies, which were due to the plaintiff, to the seventh defendant; and theft of the plaintiff’s (and its subsidiaries’ and associate companies’) 15 seals and business registration certificates on 16 October 2015.

I will elaborate on each of the above allegations.

Fraudulent transfer of shares

The first defendant’s shares were initially held by Thao when it was first incorporated in April 2008. On 11 January 2011, Thao agreed to transfer her shares to the plaintiff for US$372,000 (“the 2011 Contract”).⁷ The transfer was completed on 23 January 2013,⁸ with the plaintiff holding 520,800 ordinary shares. In August 2014, the share capital was increased to 7,520,800 shares, with the plaintiff remaining as the only shareholder.⁹ On 10 July 2015, a share transfer form was lodged with the Accounting and Corporate Regulatory Authority (“ACRA”) effecting the transfer of these 7,520,800 ordinary shares in the first defendant from the plaintiff to Thao.

It was the plaintiff’s case that this last transfer was fraudulent. On 8 July 2015, Thao, who was in Singapore¹⁰, sent a blank share transfer form to the fourth defendant, Le Thi Cam Tu (“Tu”) in Vietnam. Thao, it was contended, enlisted Tu’s assistance in stamping the plaintiff’s seal, without the plaintiff’s authority, on the blank share transfer form.¹¹ Tu then arranged for the share transfer form to be delivered to Thao in a sealed envelope. When she received the share transfer form, Thao executed it as the buyer of the first defendant’s shares. The third defendant, Doan Thi Anh Tuyet (“Tuyet”) signed the form as a witness, although he admitted that he did not personally see Vu penning his signature on the form.¹²

The plaintiff engaged a handwriting expert who opined that Vu’s signature on the share transfer form was most probably forged.¹³ The plaintiff’s case was that sometime between 8 July and 10 July 2015, Vu’s signature on the share transfer form was forged or caused to be forged by Thao and/or Tu and/or Tuyet.

Inducement of breach of contract and diversion of profits

The plaintiff contended an agreement existed with the first defendant, through course of dealing, for the supply and sale of processed instant coffee (“the Supply Agreement”). The material terms of the Supply Agreement included, inter alia: The plaintiff, by its branch Saigon Coffee Factory (“SCF”) would supply processed instant coffee products under the G7 brand to the first defendant for on-selling to international clients (“Sales Contracts”). SCF, which imported raw materials, would be the shipper of the processed instant coffee products sold by the first defendant. All the records of shipments would be kept by the plaintiff. As an aside, the plaintiff would be eligible for a tax refund in Vietnam if, within a stipulated number of days, it exported processed instant coffee products that were made from the imported raw materials. The plaintiff had to submit evidence of this to the Vietnamese authorities to claim the tax refund. The plaintiff (acting through SCF) and the first defendant would deal exclusively with each other for the supply and sale of processed instant coffee products. The first defendant would provide financial reports on the sales to the plaintiff. For sales made to international clients (except those mentioned at (f) below): the international clients would pay the purchase price to the first defendant; the first defendant would pay the plaintiff (through SCF) according to an internal pricing policy and retain the balance as earnings. For sales made to Guangxi Dongxing Linyuan Trade Co Ltd (“Guangxi”) and Dongxing Taiping Trading Co Ltd (“Dongxing”): Guangxi and Dongxing would pay the purchase price directly to the plaintiff (acting through SCF); and SCF would set off the amount paid by Guangxi and Dongxing against the amount owed by the first defendant in respect of all the other international sales.

According to the plaintiff, the Supply Agreement was carried out in accordance with its terms until about September 2015. From September to November 2015, Thao, Tu, Tuyet, TN Instant Coffee and/or TNI Ltd induced the first defendant to breach the Supply Agreement. Thereafter, in November 2015, instead of complying with the arrangement at (f), the first defendant, through its agents Thao and/or Tuyet, entered into contracts with Guangxi and Dongxing which in effect interposed TN Instant Coffee, instead of SCF, as the shipper of the processed instant coffee. The plaintiff estimated that between October 2015 and April 2016, US$9.4m had been diverted to TNI Ltd and away from the plaintiff.¹⁴

Thao was also said to have caused the first defendant to stop submitting its financial statement reports and other documents to the plaintiff in accordance with the Supply Agreement. Further, as Thao and her co-conspirators had caused the plaintiff (acting through SCF) to be replaced by TN Instant Coffee as the shipper of the processed instant coffee products, the plaintiff was unable to submit the necessary documents to the Vietnamese authorities to claim the usual tax refund.¹⁵

Stealing of seals and business registration certificates

The plaintiff alleged that on 16 October 2015, Thao, Tu, Van and two other unidentified men broke into the plaintiff’s premises in Vietnam and stole from the plaintiff’s secretary business registration certificates, seals and seal specimen registration certificates of the plaintiff, its various subsidiaries and associated companies, including SCF.

According to the plaintiff, Thao wrongfully used these stolen seals to appoint herself as the Vice Chairperson of the Board of Directors and General Director of both the plaintiff and Trung Nguyen Investment Corporation, a 70% shareholder of the plaintiff. Further, she used TN Instant Coffee’s seal to disrupt its business by closing two factories from 9 to 12 November 2015 and in March 2016, prohibiting key employees from entering the factories and obstructing deliveries.¹⁶

Summary of relief sought

The plaintiff alleged it suffered losses which included the value of the shares in the first defendant, the amounts wrongfully diverted to TNI Ltd and the amount it would have been able to claim as tax refunds. It also alleged loss of goodwill, loss for expenses incurred for the disruption of the business and loss of profits as a result of the business disruption caused by use of the stolen seals. It prayed for damages to be assessed as against the conspirators.

The plaintiff sought a declaration that it was the beneficial owner of the 7,520,800 shares of the first defendant. The plaintiff also claimed that Thao induced the first defendant to breach the Supply Agreement.¹⁷

Additionally, the plaintiff prayed for specific performance of an alleged agreement reached with the first defendant and Thao on 6 June 2013. Thao and the first defendant had agreed to provide the plaintiff with financial statement reports, management accounting reports and finance reports on a weekly, monthly, quarterly and/or yearly basis. These reports ceased to be provided after 19 October 2015 despite the plaintiff’s demands.¹⁸

The stay application

In SUM 3356, the Applicants submitted that the heart of the dispute between the parties lay in the breakdown of the marriage between...