Von Roll Asia Pte Ltd v Goh Boon Gay and others

• Judge: Chan Seng Onn J
• Judgment Date: 11 April 2017
• Neutral Citation: [2017] SGHC 82
• Citation: [2017] SGHC 82
• Defendant Counsel: Gopalan Raman (KhattarWong LLP)
• Published date: 04 August 2018
• Hearing Date: 22 December 2016,04 October 2016,07 October 2016,05 October 2016,06 October 2016
• Plaintiff Counsel: Godwin Gilbert Campos and Chan Qing Rui, Bryan (Godwin Campos LLC)
• Docket Number: Suit No 58 of 2012
• Court: High Court (Singapore)
• Date: 11 April 2017
• Subject Matter: Account,Remedies,Duties,Unlawful Means,Equity,Tort,Conspiracy,Companies,Directors,Dishonest Assistance

Chan Seng Onn J: Introduction

The present action concerns an errant individual who had acted in concert with other third parties to defraud a company for which he acted as a director.

The plaintiff, Von Roll Asia Pte Ltd, is a company incorporated in Singapore (“the Plaintiff”). The first defendant, Anson Goh Boon Gay (“the 1st Defendant”) was at the material time employed by the Plaintiff as the Regional Head of Sales for Asia.

There are four other defendants: Semi-Solution Inc (Asia) Pte Ltd, a company incorporated in Singapore (“the 2nd Defendant”); Semi-Solution Inc (Singapore) Pte Ltd, a company incorporated in Singapore (“the 3rd Defendant”); Semi-Solution Inc Trading (Shanghai) Co Ltd, a company incorporated in Shanghai (“the 4th Defendant”); Jason Lim Keng Huat (“the 5th Defendant”), who was previously a director of the 2nd Defendant and presently remains as the director of the 3rd and 4th Defendants. Collectively, all five defendants will be referred to as “the conspirators”. The 2nd to 4th Defendants will be referred to as “the SSI group”.

Presently before me, only the claims against the 1st and 3rd Defendants (“the Defendants”) remain because default judgment has already been entered in favour of the Plaintiff against the 2nd, 4th and 5th Defendants. Since the trial has been bifurcated,¹ this Judgment will only deal with the issue of liability.

Background to the present dispute

I start by outlining the undisputed facts. The Plaintiff is in the business of providing products, services and systems for power generation, insulation, transmission and distribution. The Plaintiff employs agents and distributors to source for and secure new customers in markets that the Plaintiff has yet to establish a presence in. In 2005, the Plaintiff engaged Faxolif Industries Pte Ltd (“Faxolif”) as one of its main distributors through a written agreement for Faxolif’s services.

Until the 1st Defendant’s dismissal on 9 May 2011, he was employed by the Plaintiff as its Regional Head of Sales for Asia under a contract of employment dated 16 November 2007 (“the Employment Agreement”).²

Just three months after his employment, the 1st Defendant terminated the Plaintiff’s distribution agreement with Faxolif. He then appointed We Corp Pte Ltd (“Wecorp”) as a distributor of the Plaintiff on 3 March 2008.³ This appointment was made by the 1st Defendant even prior to Wecorp’s incorporation⁴ and without review by the Plaintiff’s legal department.⁵ Subsequently, Wecorp’s services were terminated in September 2008 and replaced with that of the 2nd Defendant. The Plaintiff’s main point of contact in Wecorp, one Nick Ong, also moved over to the 2nd Defendant. The 5th Defendant controlled the 2nd Defendant and the rest of the SSI group.

Between 30 September 2009 and 8 May 2011, there were numerous instances of diversions of both current and prospective clients of the Plaintiff to the SSI group.⁶ In addition, even though the Plaintiff had its own customer service and sales teams, the 1st Defendant caused the Plaintiff to pay commissions to the companies comprising the SSI group for customers that had been diverted to them for their management.⁷

The Plaintiff’s case

In the present proceedings, the Plaintiff claims that: The conspirators unlawfully conspired to cause loss to the Plaintiff through an agreement for the SSI group to be enriched by diverting to the SSI group both the Plaintiff’s existing and prospective clients, as well as by defrauding the Plaintiff through the procurement of various commissions and payments to the SSI group (“the Conspiracy Claim”). The 1st Defendant breached his fiduciary duties owed to the Plaintiff (qua director) by channelling the Plaintiff’s customers to the SSI group and paying commissions to the SSI group for the management of these customers, by making secret profits and by failing to disclose conflicts of interest (“the Breach of Directors’ Duties Claim”). The 3rd Defendant dishonestly assisted the 1st Defendant in breaching his fiduciary duties owed to the Plaintiff and is thus liable to account for the losses suffered by the Plaintiff or the profits made from its dishonest assistance.

The Plaintiff also initially claimed in its Statement of Claim that the conspirators breached the obligation of confidence by exploiting the confidential information gained by the 1st Defendant from being a director of the Plaintiff.⁸ This claim is however not pursued in the Plaintiff’s closing submissions.

The Defendants’ case

In response to the Conspiracy Claim, the Defendants assert that there was no agreement to unlawfully injure the Plaintiff and that the 1st Defendant had no financial interest in the success of the SSI group.

In relation to the Breach of Directors’ Duties Claim, the 1st Defendant argues that all his actions in respect of the Plaintiff were carried out in the best interest of the Plaintiff. Even if the 1st Defendant did breach his fiduciary duties owed to the Plaintiff, the Defendants argue that the 3rd Defendant is nonetheless not liable for dishonest assistance as it was not dishonest.

Issues arising for determination

The main factual question that I have to determine in relation to the Conspiracy Claim is whether there was an agreement to unlawfully conspire amongst the conspirators to cause loss to the Plaintiff. If there was such an agreement, I then have to determine what actions were taken by the Defendants together with the other conspirators (ie, the 2nd, 4th and 5th Defendants) in furtherance of this agreement.

The following issues arise for determination in relation to the Breach of Directors’ Duties Claim: Whether the 1st Defendant had breached his duties to act honestly and/or with reasonable diligence in dealing with the affairs of the Plaintiff; Whether the 1st Defendant had made improper use of his position as an officer of the Plaintiff; Whether the 1st Defendant had failed to disclose any conflicts of interest to the Plaintiff and abused his position to make a secret profit; and Whether the 3rd Defendant had dishonestly assisted in the 1st Defendant’s breach of his fiduciary duties owed to the Plaintiff and if so, whether the 3rd Defendant can be made to account for its profits.

The Conspiracy Claim

I commence the analysis by briefly setting out the law on conspiracy by unlawful means before discussing whether the Conspiracy Claim is made out on the facts.

The law

The law on the tort of conspiracy by unlawful means is clear. The leading authority is the Court of Appeal decision in EFT Holdings, Inc and another v Marinteknik Shipbuilders (S) Pte Ltd [2014] 1 SLR 860 (“EFT Holdings”), which was also recently affirmed by the Court of Appeal in Simgood Pte Ltd v MLC Barging Pte Ltd and others [2016] SGCA 46 (“Simgood”) at [13]. To establish this tort, the Plaintiff must show that (EFT Holdings at [112]): (a) there was a combination of two or more persons to do certain acts; (b) the alleged conspirators had the intention to cause damage or injury to the plaintiff by those acts; (c) the acts were unlawful; (d) the acts were be performed in furtherance of the agreement; and (e) the plaintiff suffered loss as a result of the conspiracy.

At [101], the Court of Appeal in EFT Holdings explained that in an action for a tort of conspiracy by unlawful means, a claimant “would have to show that the unlawful means and the conspiracy were targeted or directed at the claimant” and that “[i]t is not sufficient that harm to the claimant would be a likely, or probable or even inevitable consequence of the defendant’s conduct.” The Court of Appeal made clear that the loss to the claimant must have been “intended as a means to an end or as an end in itself.”

Broadly speaking, the parties are largely in agreement on the law relating to conspiracy, save on three issues. In respect of these three issues, it is beyond doubt that the Plaintiff’s position is more consistent with the current legal position.

First, the Defendants argue that there is a higher standard of proof, above that of a balance of probabilities in an action for conspiracy.⁹ This is plainly erroneous. Even though the nature of the allegations involved means that “the amount of proof required is higher than that required in a normal civil action”, the standard of proof is still the civil standard based on the balance of probabilities: Swiss Butchery Pte Ltd v Huber Ernst and others and another suit [2010] 3 SLR 813 (“Swiss Butchery”) at [17], affirming Wu Yang Construction Group Ltd v Zhejiang Jinyi Group Co, Ltd and others [2006] 4 SLR(R) 451 at [93].

Second, the Defendants argue that the Plaintiff has to show a “predominant purpose” on the part of the conspirators to injure the Plaintiff.¹⁰ This argument clearly misunderstands the true nature of the Plaintiff’s claim, which is based on the tort of conspiracy by unlawful means and not lawful means. This fundamental misunderstanding is evident from the Defendants’ reliance on authorities which relate to the latter.¹¹ As seen from the Court of Appeal decision of Quah Kay Tee v Ong and Co Pte Ltd [1996] 3 SLR(R) 637 at [45], in an action for conspiracy by lawful means where no unlawful act is involved, there is however an additional requirement of a “predominant purpose” to cause loss to the plaintiff:

The tort of conspiracy comprises two types: conspiracy by unlawful means and conspiracy by lawful means. A conspiracy by unlawful means is constituted when two or more persons combine to commit an unlawful act with the intention of injuring or damaging the plaintiff, and the act is carried out and the intention achieved. In a conspiracy by lawful means, there need not be an unlawful act committed by the conspirators. But there is the additional requirement of proving a “predominant purpose” by all the conspirators to cause injury or damage to the plaintiff, and the act...