Turf Club Auto Emporium Pte Ltd and others v Yeo Boong Hua and others and another appeal

• Judge: Sundaresh Menon CJ
• Judgment Date: 02 August 2018
• Neutral Citation: [2018] SGCA 44
• Citation: [2018] SGCA 44
• Defendant Counsel: Irving Choh, Melissa Kor Wan Wen and Christine Chuah Hui Fen (Optimus Chambers LLC),Assoc Prof Goh Yihan (School of Law, Singapore Management University) as amicus curiae.,Adrian Tan, Ong Pei Ching, Yeoh Jean Wern, Lim Siok Khoon, Joel Goh Chee Hsien and Hari Veluri (Morgan Lewis Stamford LLC)
• Docket Number: Civil Appeals Nos 168 and 171 of 2015
• Hearing Date: 15 August 2017,02 March 2018
• Plaintiff Counsel: Kelvin Poon, Kevin Tan and Alyssa Leong (Rajah & Tann Singapore LLP)
• Published date: 08 August 2018
• Court: Court of Appeal (Singapore)
• Date: 02 August 2018
• Subject Matter: Fiduciary relationships,Conspiracy,Tort,Contract,Remedies,Damages,Equity,Inducement of breach of contract

Andrew Phang Boon Leong JA (delivering the judgment of the court): Introduction

As the late Prof S F C Milsom perceptively observed, the common law system developed in a strikingly systematic fashion notwithstanding the absence of a clear blueprint as such (see generally S F C Milsom, “Reason in the Development of the Common Law” (1965) 81 LQR 496). This is an observation that carries the greatest of weight – if nothing else, because Prof Milsom has been described as being “the most distinguished legal historian of the twentieth century” (see David Ibbetson, “Milsom’s Legal History” [2017] CLJ 360 at p 360). Indeed, the system of common law and equity that constitutes the foundation of the Singapore legal system may be viewed as an integrated as well as interwoven tapestry. This is especially the case in the law of contractual damages. The basic principles have remained clear and stable throughout almost two centuries, drawing their source from the corresponding English jurisprudence. It is true that the Singapore principles have not always followed the English lead (see, for example, in relation to the doctrine of remoteness of damage, the decisions of this Court in MFM Restaurants Pte Ltd and another v Fish & Co Restaurants Pte Ltd and another appeal [2011] 1 SLR 150 (“MFM Restaurants”) and Out of the Box Pte Ltd v Wanin Industries Pte Ltd [2013] 2 SLR 363). However, the basic legal contours have nevertheless remained well-settled. In particular, it is a deeply enshrined principle of both English and Singapore contract law that the general aim of damages for breach of contract is to compensate and that such compensatory damages are ordinarily to be assessed by reference to the plaintiff’s loss (see the famous English decision of Robinson v Harman (1848) 1 Exch 850 (“Robinson”) at 855, and the recent decision of this Court in PH Hydraulics & Engineering Pte Ltd v Airtrust (Hong Kong) Ltd and another appeal [2017] 2 SLR 129 (“PH Hydraulics”) at [62]).

The present appeals, however, concern a challenge to this long established principle of the law of contractual damages. This challenge arises from the developments in the English common law following two significant authorities – the English High Court’s judgment in Wrotham Park Estate Co Ltd v Parkside Homes Ltd and Others [1974] 1 WLR 798 (“Wrotham Park”) and the decision of the House of Lords in Attorney-General v Blake (Jonathan Cape Ltd Third Party) [2001] AC 268 (“AG v Blake”). These authorities, which have been construed by many as departing from the fundamental compensatory principle, require us to consider whether the legal landscape in relation to contractual damages should now take on – in part at least – a somewhat different shape. They give rise to the possibility that there is a distinct head of “restitutionary damages” that may be awarded in the law of contract, not to compensate the plaintiff for the loss caused by the breach of contract, but premised on the gains made by the defendant as a result of the breach. To add to the complexity that faces the Singapore courts, the principles governing the novel heads of damages recognised in these two cases – which we shall refer to as “Wrotham Park damages” and “AG v Blake damages”, respectively – were unsettled in English law and not as clear as they might be, at least at the time when we heard these appeals and prepared our initial draft of the present judgment. Since then, the UK Supreme Court has released its decision in One Step (Support) Ltd v Morris-Garner and another [2018] 2 WLR 1353 (“One Step (SC)”), which sets out the legal position in the UK. In this judgment, we will address these decisions and set out the principles that apply in Singapore when a court seeks to depart from the orthodox compensatory measure of damages by reference to these authorities, with a focus on Wrotham Park damages.

Scope of the present judgment

To set the context, these appeals, which concern breaches of a contractual consent order (“the Consent Order”) between the Respondents and some (but not all) of the Appellants, were first heard by this Court in March 2016. Following that hearing, we delivered judgment on 22 March 2017 (reported as Turf Club Auto Emporium Pte Ltd and others v Yeo Boong Hua and others and another appeal and other matters [2017] 2 SLR 12) (“Turf Club (No 1)”) finding that the Consent Order had been breached. In that judgment, we directed the parties to submit on three issues which arose from that finding, including the appropriate remedies to be ordered for the breach of the Consent Order, and which of the Appellants ought to be subject to those orders. Subsequent to the release of our judgment, it transpired that other causes of action for breach of fiduciary duty and in tort – which had not been decided by the Judge and which were not the subject of the first hearing – had to be determined. We thus heard the parties on two occasions: once on 15 August 2017 and the second on 2 March 2018. We will detail the procedural history of the appeals in the next section, but it may be helpful to summarise, at the outset, the outstanding issues that will be dealt with in the present judgment (which uses the same terms as defined in Turf Club (No 1)): Did the Appellants owe fiduciary duties to the Respondents and, if so, were these duties breached (“the Fiduciary Duties Issue”)? Which parties are liable in contract, and therefore subject to any contractual remedies that the court may order, for the breaches of the Consent Order (“the Party Issue”)? What remedies should follow from the repudiatory breaches of the Consent Order which this Court found were committed in Turf Club (No 1) and is there scope for the imposition of Wrotham Park damages (“the Remedy Issue”)? Are the Appellants who are not party to the Consent Order, and therefore not liable in contract, liable under the tort of conspiracy to procure the breaches of the Consent Order and/or the tort of inducing the breaches of the Consent Order (“the Tort Issue”)? If so, what are the remedies that should flow from such tortious liability?

Before we address these issues, we provide a brief summary of the dispute which gave rise to these proceedings, our findings in Turf Club (No 1) as well the relevant procedural developments which followed the delivery of that first judgment.

Background Summary of the dispute

These appeals arise out of a dispute between two groups of parties who entered into a joint venture in 2001 to develop a large plot of land in Bukit Timah referred to as “Turf City”. The first group, the Singapore Agro Agricultural Pte Ltd (“SAA”) Group (“SAA Group”), comprises five individuals: Tan Senior, Tan Chee Beng (“Tan CB”), Koh Khong Meng (“Koh KM”), Samuel Ng and Ong Cher Keong (“Ong CK”). The three Respondents make up the second group. Two members of the SAA Group – Samuel Ng and Ong CK – are not parties to the present set of appeals although they were defendants in the underlying suit (“Suit 27”) from which these appeals arose.

Pursuant to the joint venture between the SAA Group and the Respondents, two companies, Turf City Pte Ltd (“TCPL”) and Turf Club Auto Emporium (“TCAE”) (collectively referred to as “the JV Companies”), were incorporated. The shares in the JV Companies were held as follows: the three Respondents each held 12.5%, and thus 37.5% of the shares in total; and the SAA Group held the remaining 62.5% of the shares, although Tan CB and Ong CK held their shares indirectly through SAA, a company in which they were shareholders and that was controlled by the SAA Group.

The site was leased from the Singapore Land Authority (“the SLA”) by SAA under a “2001 Head Lease”. SAA then granted corresponding sub-tenancies to the JV Companies, which in turn granted sub-sub-tenancies of the units in the site to ultimate tenants. The main source of revenue of the JV Companies came from the rent or fees payable by the ultimate tenants.

While the site was being developed, the two groups fell into disputes. The Respondents consequently commenced two actions, Suit 703 and OS 1634, based on, among other things, allegations that they had been oppressed as minority shareholders of the JV Companies. The two actions were later consolidated; we hence refer to Suit 703 and OS 1634 collectively as “the Consolidated Suits”. The Consolidated Suits were brought against some members of the SAA Group. Notably, Tan CB and Ong CK, who are both parties to the present proceedings, were not parties to the Consolidated Suits. The six defendants to the Consolidated Suits were TCPL, TCAE, SAA, Samuel Ng, Koh KM and Tan Senior (collectively, “the Defendants (Consolidated Suits)”). The parties, however, dispute whether Tan Senior continued to be a party to the Consolidated Suits after his bankruptcy in 2003.

In the meantime, in 2004, the 2001 Head Lease between SAA and the SLA expired and was renewed for three years through a fresh head lease (“the 2004 Head Lease”). SAA correspondingly granted sub-tenancies to the JV Companies. Before the Consolidated Suits proceeded to trial, in February 2006, the parties reached a settlement that was recorded by the High Court and encapsulated in the Consent Order. The parties named in the Consent Order were the Respondents and the Defendants (Consolidated Suits). Tan Senior denies being party to the Consent Order, even though he is named therein, on the basis of his lack of involvement in the Consolidated Suits following his bankruptcy in 2003. He also alleges that he had at no point participated in the settlement negotiations which led to the Consent Order and was not privy to the correspondence that was exchanged between counsel over its terms.

The Consent Order was intended to settle the disputes which were the subject-matter of the Consolidated Suits and end the joint venture by extricating either the Respondents or the SAA Group from the JV Companies (see ...