Tuitiongenius Pte Ltd v Toh Yew Keat and another

JurisdictionSingapore
CourtCourt of Three Judges (Singapore)
JudgeSundaresh Menon CJ,Tay Yong Kwang JA,Quentin Loh J
Judgment Date19 October 2020
Neutral Citation[2020] SGCA 103
Citation[2020] SGCA 103
Plaintiff CounselTan Gim Hai Adrian, Ong Pei Ching, Hari Veluri, Yeoh Jean Ann and Jason Hong (TSMP Law Corporation)
Hearing Date29 June 2020
Date19 October 2020
Defendant CounselNg Lip Chih and Goh Hui Hua (Foo & Quek LLC)
Docket NumberCivil Appeal No 218 of 2019
Published date24 October 2020
Subject MatterExpress terms,Passing off,Tort,Duties,Breach,Contractual terms,Fiduciary relationships,Formation,Damage,Misrepresentation or confusion,Equity,Civil Procedure,Pleadings,Contract
Sundaresh Menon CJ (delivering the judgment of the court): Introduction

The present appeal arises out of the breakdown of the relationship between two parties who entered into a joint venture in the private tuition business. The appellant, Tuitiongenius Pte Ltd, is a joint venture incorporated by the first respondent, Mr Toh Yew Keat (“Mr Toh”), and one Mr Keng Yew Huat (“Mr Keng”) who were its directors and equal shareholders. The second respondent, Economics at Tuitiongenius Pte Ltd (“ETGPL”), is a company incorporated by Mr Toh. The appellant and ETGPL are both in the business of providing private tuition services. The appellant commenced proceedings in the High Court against the respondents, alleging that Mr Toh had breached his employment agreement and his fiduciary duties and seeking damages arising from these breaches as well as for the tort of passing off. These claims were largely dismissed by the High Court judge (“the Judge”). This is the appellant’s appeal against the Judge’s dismissal of its claims. We start by setting out the background facts that led to this appeal.

Background facts The incorporation of the appellant

Mr Toh began providing private tuition classes in economics in 2007. Soon thereafter, he offered these classes in a room at his parents’ Housing and Development Board flat at Choa Chu Kang (“HDB Flat”). In April 2009, Mr Toh and Mr Keng incorporated the appellant. Mr Keng was a family friend of Mr Toh’s parents, who evidently thought of him as a nephew or foster son.

The parties dispute the circumstances surrounding the incorporation of the appellant. According to Mr Keng, Mr Toh’s conduct of his tuition classes in the room at the HDB Flat had proved to be unsustainable, with Mr Toh running out of space to meet the growing demand for his tuition services. Mr Keng contended that this led to their decision to enter into their first agreement, which Mr Keng referred to as the “CCK Joint Venture”. Mr Keng claimed that pursuant to the CCK Joint Venture, he invested a sum of between $20,000 and $30,000 to renovate the aforesaid room where Mr Toh conducted his tuition classes. In return for this investment, Mr Keng was to receive half of the monthly tuition revenue after deducting a sum of $2,000, which would be paid to Mr Toh as his fixed monthly salary. However, Mr Keng alleged, Mr Toh never paid him his share of the revenue that was his due under the CCK Joint Venture. Despite the absence of any such payment, Mr Keng agreed to enter into a “fresh joint venture” with Mr Toh, pursuant to which the appellant was incorporated.

Mr Keng said that he trusted Mr Toh notwithstanding his disappointment over the CCK Joint Venture. Mr Keng further claimed that despite the “fresh joint venture” and the incorporation of the appellant, it was agreed between the parties that Mr Toh would continue to teach and retain the fees from the group of students that he was tutoring at that time until they had graduated from junior college (“JC”). Save in respect of that group of students, Mr Keng’s understanding of the “fresh joint venture” was that the entirety of Mr Toh’s tuition business would be transferred to and carried out through the appellant. In this way, it was envisaged that the tuition services provided by their joint venture could grow and, in time, be provided through more tutors and at more locations.

Mr Toh’s account was almost entirely different. Mr Toh claimed that between 2007 and 2009, he had established himself as a popular economics tuition teacher for JC students. As a result, the demand for his classes grew. During this time, Mr Toh marketed his tuition services under the name “TuitionGenius”. Mr Toh denied Mr Keng’s account of the CCK Joint Venture in its entirety. Instead, Mr Toh claimed that Mr Keng had approached him and had suggested that they establish the appellant as a joint venture in order to take advantage of the reputation of “TuitionGenius”. Mr Toh was initially hesitant because he lacked the means to invest any capital in a joint venture, had no experience in running one and wanted financial security as he hoped in time to start a family. To allay these concerns, the parties concluded an oral agreement to enter into a joint venture using the appellant as their vehicle, on the following terms: (a) Mr Toh would be free to continue to run his private tuition business and retain the revenue that it generated; and (b) Mr Toh would apply the expertise that he had acquired in building up a successful private tuition business to grow the appellant’s business, and would participate in joint marketing activities with the appellant. We refer to this oral agreement as the “Joint Venture Agreement”.

One of the key differences between the parties’ respective positions is the extent to which Mr Toh could retain the fruits of the private tuition business which he had already built up on his own. While Mr Keng contended that Mr Toh could only retain the fees from those JC students he was already teaching when they embarked on the Joint Venture Agreement, Mr Toh rejected this contention, claiming that there was no limit on his ability to grow his own private tuition business alongside the appellant’s. The resolution of this central issue will have a significant bearing on the merits of the appellant’s claims against the respondents. Having set out the key factual dispute, we turn to the conduct of the parties’ respective businesses.

The conduct of the parties’ respective businesses

The appellant’s claim in contract arose from a written employment agreement entered into between Mr Toh and the appellant in August 2009 (“the Employment Agreement”). Under its terms, Mr Toh was to serve as a director of the appellant for a period of five years, and would be paid a salary-cum-director’s fee of $7,000 a month after the appellant had recouped its initial start-up capital. The Employment Agreement included the following clauses which formed the subject matter of the contractual dispute between the parties: DEVOTION OF TIME TO EMPLOYMENT

The Executive [meaning Mr Toh] 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 [meaning the appellant]. 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.

...

EXCLUSIVE EMPLOYMENT

During employment with the Company, [the] 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. [The] Executive will not enter into any agreement which conflicts with his duties or obligations to the Company. [The] 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.

ENTIRE AGREEMENT

This Agreement contains the entire agreement and supersedes all prior agreements and understandings, oral or written, with respect to the subject matter hereof. This Agreement may be changed only by an agreement in writing signed by the party against whom any waiver, charge, amendment, modification, or discharge is sought.

In September 2009, the appellant registered a business under the name REAL Education Centre (“REC”) which operated from premises at Clementi (the “Clementi Centre”). Mr Toh taught economic classes at the Clementi Centre, but continued to conduct classes at other locations as well, including at the HDB Flat. In June 2011, the appellant opened a second branch at Bedok (the “Bedok Centre”). Mr Toh also taught some economics classes at the Bedok Centre, but the appellant ceased to operate this branch sometime in or around May 2014 as it was not profitable.

In September 2012, Thinktank Learning Centre Pte Ltd (“ThinkTank”) was incorporated with Mr Toh, Mr Keng and one Mr Xavier Tong (“Mr Tong”) as its directors, and Mr Toh and Mr Tong as its shareholders. In November 2012, ThinkTank opened a tuition centre at Choa Chu Kang and Mr Keng attended its opening ceremony. Sometime in or around April 2014, ThinkTank took over the Bedok Centre premises and the Bedok Centre’s students from the appellant. Mr Keng claimed that he was not aware of this and alleged that he would not have allowed ThinkTank to take over the Bedok Centre premises and the Bedok Centre’s students allegedly at no cost, especially when the appellant had incurred expenditure to renovate the premises to make it suitable for its tuition business. Mr Keng claimed that Mr Toh had not disclosed his ownership of ThinkTank. In contrast, Mr Tong testified that ThinkTank had agreed to pay the appellant 20% of its revenue derived from the Bedok Centre premises. This is another key area of dispute that forms part of the appellant’s breach of fiduciary duties claim against Mr Toh, which we will deal with later in the judgment.

Meanwhile, in November 2010, Mr Toh registered a sole proprietorship, Economics at Tuitiongenius (“ETG”). He explained that he did this in order to better organise his private tuition business. In April 2014, Mr Toh incorporated ETGPL to replace ETG and corporatise his private tuition business. We refer to ETG and ETGPL collectively as the “ETG Entities”. Mr Toh claimed that he had informed Mr Keng of this move, and had even been encouraged by Mr Keng to develop and grow his own private tuition...

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