Tuitiongenius Pte Ltd v Toh Yew Keat and another

• Jurisdiction: Singapore
• Judge: Lee Seiu Kin J
• Judgment Date: 05 November 2019
• Neutral Citation: [2019] SGHC 264
• Plaintiff Counsel: Adrian Tan Gim Hai, Ong Pei Ching, Michelle Chew Wai Yin and Yeoh Jean Ann (TSMP Law Corporation)
• Date: 05 November 2019
• Docket Number: Suit No 453 of 2016
• Hearing Date: 11 June 2018,23 May 2018,02 May 2018,09 May 2018,13 June 2018,06 June 2018,28 February 2019,05 March 2019,24 May 2018,10 May 2018,08 March 2019,04 March 2019,08 May 2018,03 May 2018,11 May 2018,15 May 2018,07 March 2019,24 May 2019,18 May 2018,06 March 2019
• Subject Matter: Lawful means,Passing off,Companies,Duties,Waiver,Conspiracy,Directors,Contract,Breach,Tort
• Published date: 09 November 2019
• Defendant Counsel: Ng Lip Chih, Beatrice Chiang Sing Hui and Goh Hui Hua (NLC Law Asia LLC)
• Court: High Court (Singapore)
• Citation: [2019] SGHC 264
• Year: 2019

Lee Seiu Kin J: Introduction

This is an action by the plaintiff company, Tuitiongenius Pte Ltd (“TGPL”), against its former managing director, Toh Yew Keat, also known as Eugene (“Eugene”), and a company controlled by him, Economics at Tuitiongenius Pte Ltd (“ETGPL”) (collectively “the defendants”) for breach of contract, breach of fiduciary duties and passing off. The defendants in turn have counterclaimed against TGPL, Keng Yew Huat (“Keng”), and his son, Keng Jun Hao (“Jun Hao”) in conspiracy, passing off, and copyright infringement. The plaintiff may be referred to as either the plaintiff or TGPL in this judgment.

The parties

TGPL is in the business of providing academic tutoring services.¹ It was incorporated in April 2009 by Eugene and Keng. They were the only two directors of the company with each of them holding half its shares. At the commencement of this suit, the sole director and shareholder of TGPL was Jun Hao.

ETGPL is a company, also in the educational services business, incorporated by Eugene in April 2014.² Eugene is its sole director and shareholder. Eugene had, in November 2010, registered a sole proprietorship called Economics at Tuitiongenius (“ETG”).³ He terminated ETG’s registration on the day ETGPL was incorporated.⁴

Eugene is a 31-year-old tutor working at ETGPL. He holds a bachelor’s degree in economics from the National University of Singapore (“NUS”) and a master’s degree in economics from the Singapore Management University.⁵ Jun Hao is a 26-year-old working full-time at TGPL. He holds a diploma in chemical and biomolecular engineering from Ngee Ann Polytechnic.⁶

Keng is a 51-year-old Chinese-educated businessman. He is in the business of construction and trading, and runs a construction company. He also has a daughter, Keng Xiang Qi (“Xiang Qi”).⁷

Keng has known Eugene since the latter was about 12 years old. Keng and his wife were friends of Eugene’s parents and it is undisputed that their families had been close.⁸ Keng said that he used to give Eugene presents like school shoes, paid for various expenses and even gave him pocket money.⁹ According to Keng, Eugene was intelligent and he thought of him like a nephew or a foster son. From this part of the evidence, it is obvious that Keng was fond of Eugene. Keng visited Eugene’s home often, even after Eugene’s parents were divorced sometime in 2003 or 2004. He regularly went to Eugene’s flat in the evenings to drink in the company of his mother. This association only stopped after a series of events in October 2015 that will be described below.

Facts Eugene’s tuition business in 2007 and 2008

Eugene first started giving private tuition classes after he completed his A-levels examinations in 2007, while he was serving his National Service. It was a means of earning extra income to support his family which was in dire financial straits. Eugene’s mother had been declared a bankrupt and the family had to move into a hostel so that they could rent out their Housing and Development Board flat in Choa Chu Kang (“the CCK flat”) to earn some income.¹⁰ By giving tuition classes at night, Eugene was able to help his mother with the family finances. As a result, Eugene’s family was able to move back to the CCK flat in 2008.¹¹ Eugene continued to give tuition classes and became increasingly popular as a tutor.

Incorporation of TGPL

In April 2009, Eugene and Keng incorporated TGPL with the two of them as directors and equal shareholders. Keng made various capital injections to TGPL. After premises were secured at Clementi (“Clementi Centre”), TGPL commenced business operations in January 2010.¹²

The Employment Agreement

On 20 August 2009, Eugene signed an employment agreement with TGPL (“Employment Agreement”),¹³ in which he was to serve as Managing Director of TGPL for a period of five years. This Employment Agreement contained, inter alia, the following clauses: 5. DEVOTION OF TIME TO EMPLOYMENT

The Executive shall devote the Executive’s best efforts and substantially all of the Executive’s working time to performing the duties on behalf of the Company. The Executive shall provide services during the normal business hours of the Company as determined by the Company. Reasonable amounts of time may be allotted to personal or outside business, charitable and professional activities and shall not constitute a violation of this Agreement provided such activities do not materially interfere with the services required to be rendered hereunder …

… 7.1 Salary Executive shall be paid the amount of SGD $2,000 monthly for his services as a managing director. (The salary payment will only commence after all initial startup capital has been recovered). This shall be reviewed on or before 20th August of each year… … 7.4 Director Fee Executive shall be paid the amount of SGD $5,000 monthly for his services as a director. (The salary payment will only commence after all initial startup capital has been recovered). …

…

11. EXCLUSIVE EMPLOYMENT

During employment with the Company, Executive will not do anything to compete with the Company’s present or contemplated business; nor will he or she plan or organize any competitive business activity. Executive will not enter into any agreement which conflicts with his duties or obligations to the Company. Executive will not during his employment or within ONE year after it ends, without the Company’s express written consent, directly or indirectly, solicit or encourage any Executive, agent, independent contractor, supplier, customer, consultant or any other person or company to terminate or alter a relationship with the Company.

…

[emphasis in original]

The operations of TGPL and associated entities

In September 2009, TGPL registered a sole proprietorship business called REAL Education Centre (“REC”). There is some dispute as to the nature of this entity in relation to TGPL which will be set out below. Be that as it may, it is not disputed that the signboards at the Clementi Centre displayed the name “REAL Education Centre” and not “Tuition Genius”. The Clementi Centre offered tuition in various subjects to primary, secondary and junior college (“JC”) students. Eugene taught economics classes for second year JC (“JC2”) students.¹⁴ However, he also continued to teach students at the CCK flat outside the ambit of TGPL or REC. Other tutors provided tuition at the Clementi Centre for economics as well as for other subjects. Tuition fees were collected by TGPL and the tutors were paid by TGPL in accordance with the number of students in their classes. The fees from Eugene’s students at the Clementi Centre were initially paid into TGPL. However, in 2012, the fees from Eugene’s classes at the Clementi Centre were paid directly to Eugene. Eugene explained that he had initially paid the fees he earned personally into the plaintiff’s bank accounts in order to assist the plaintiff’s cash flow situation in the first few years after its incorporation.

In November 2010, Eugene registered ETG as a sole proprietorship.

In June 2011, TGPL opened a second branch at Bedok (“Bedok Centre”). The signage there referred to it as “REAL Education Bedok”.¹⁵ Eugene also conducted economics classes at the Bedok Centre. It was closed sometime in May 2014.¹⁶

In September 2012, Thinktank Learning Centre Pte Ltd (“ThinkTank”) was incorporated with Eugene, Keng and Xavier Tong, a friend of Eugene, as its directors.¹⁷ A tuition centre at Choa Chu Kang was opened in November 2012 and it operated under the name ThinkTank. Keng attended the opening ceremony of this centre.¹⁸

TGPL’s tuition business was conducted by Eugene, along with various full-time staff and temporary staff, including Lim Gim Siong (“Gim Siong”), Eugene Koh Joon Shih, Teoh Shin Fung, Ang Lee Theng and Wong Jing Yong. Jun Hao also started working at TGPL, and specifically at the Clementi Centre, towards the end of 2014.

Keng and Eugene were joint signatories of TGPL’s and REC’s bank accounts with United Overseas Bank and Overseas Chinese Banking Corporation.¹⁹ Keng regularly signed claim forms and cheques that were presented to him for the conduct of the business of TGPL.

Eugene also conducted economics classes at ETG and, after its incorporation, ETGPL. The different tuition entities (TGPL, ETG/ETGPL and ThinkTank) sometimes conducted joint marketing activities, for instance the designing, printing and distribution of flyers.

Jun Hao’s involvement in TGPL

Jun Hao first worked at TGPL for a brief period of time in 2010, during which time he was informally regarded as an administrator.²⁰ He subsequently became a full-time staff of TGPL in 2014.²¹ Keng claimed that in 2013 he suspected that Eugene was siphoning money from TGPL and sent Jun Hao to work in TGPL in order to gather information about how the business was doing.²²

There is some dispute between both sides as to the degree of involvement which Jun Hao had in TGPL. Keng’s impression was that Eugene would not give Jun Hao access to computers and records, and had made sure that Jun Hao would only be assigned menial tasks such as the distribution of flyers. While Jun Hao accepted that Eugene purported to teach him about handling finance-related matters for TGPL, he claimed not to have access to TGPL accounts, and was not shown any information about money being paid to Eugene.²³ According to Eugene, starting from 2014, Jun Hao was expressly informed in the course of training by the other staff in TGPL that REC and ETG were separate business entities with different owners, and that the revenue generated by REC and ETG classes were to be kept and recorded separately.²⁴ Jun Hao also handled the registration of new students and prepared TGPL’s daily reports.

Eugene’s exit from TGPL

On 1 October 2015, Eugene resigned as a director of TGPL, and transferred his shareholding in TGPL to Keng.²⁵ Keng in...