Wong Sung Boon v Fuji Xerox Singapore Pte Ltd and another

• Jurisdiction: Singapore
• Judge: Audrey Lim J
• Judgment Date: 02 February 2021
• Neutral Citation: [2021] SGHC 24
• Court: High Court (Singapore)
• Docket Number: Suit No 163 of 2018
• Published date: 08 February 2021
• Year: 2021
• Hearing Date: 01 September 2020,19 October 2020,04 August 2020,04 September 2020,02 September 2020,12 August 2020,05 August 2020,07 August 2020,11 August 2020,03 September 2020,06 August 2020,13 November 2020
• Plaintiff Counsel: Wendell Wong, Jared Chen, Andrew Chua and Chua Shu Ying (Drew & Napier LLC)
• Defendant Counsel: Aaron Lee, Toh Jia Yi and Marc Malone (Allen & Gledhill LLP)
• Subject Matter: Employment Law,Contract of service,Breach,Tort,Conspiracy,Inducement of breach of contract,Companies,Directors,Duties
• Citation: [2021] SGHC 24

Audrey Lim J: Introduction

The plaintiff Wong Sung Boon (“Wong”), the former Senior Managing Director (“Senior MD”) of the first defendant Fuji Xerox Singapore Pte Ltd (“FXS”), commenced this action against FXS for having been summarily dismissed without cause and in breach of his employment contract. He also claims that FXS and the second defendant (Fuji Xerox Asia Pacific Pte Ltd or “FXAP”) conspired to injure him by dismissing him, and alternatively that FXAP wrongfully induced FXS to breach his employment contract by summarily dismissing him. Conversely, FXS claims that Wong’s dismissal was lawful and counterclaims against him for losses caused to it as a result of his breach of fiduciary duties and obligations under his employment contract. I will refer to FXS and FXAP collectively as “the Defendants”, where appropriate.

Background

FXS is owned by FXAP, the latter in turn owned by Fuji Xerox Co Ltd (“FX”). FX is jointly owned by Xerox Limited (“Xerox”) and Fujifilm Holdings Corporation (“Fujifilm”). FXAP’s primary purpose is to provide oversight and direction, and coordinate and consolidate the operations of various operating companies of FX and Fujifilm.

Wong was FXS’ Senior MD and Chief Executive Officer from 1 April 2011 until he was issued a termination notice on 21 December 2017 (“Termination Notice”). His appointment as Senior MD was last governed by a Letter of Appointment dated 1 April 2016 (“Employment Contract”), which was renewed, with his latest employment period from 1 April 2017 to 31 March 2018.¹

From April to June 2017, an Independent Investigation Committee (“IIC”) established by Fujifilm conducted an investigation into the accounting practices in Fuji Xerox Australia (“FXA”) and Fuji Xerox New Zealand (“FXNZ”), subsidiaries of FXAP. The investigation revealed accounting irregularities that caused losses to the entities. The IIC then released its report with recommendations to prevent recurrence of such practices.²

In September 2017, FXS commissioned Deloitte & Touche Financial Advisory Services Pte Ltd (“Deloitte”) to conduct an audit investigation (“Audit Investigation”). Katsumi Kizaki (“Kizaki”), then FXAP’s General Manager of the Legal Department, testified that the Investigation pertained to allegations of serious misconduct by Wong, which were made in an anonymous whistle-blower letter. The Audit Investigation was expected to take place between 13 and 29 September 2017. About the same time, Fujifilm’s Global Audit Division (“GAD”) also commenced investigations into the allegations. On 19 October 2017, FXS suspended Wong with full pay pending the outcome of the Audit Investigation.³

As part of the Audit Investigation, Deloitte held a teleconference with Wong on 30 October 2017 and, on 30 November 2017, Wong met Deloitte (“30 Nov 2017 Meeting”).⁴ Due to his health condition, Wong claimed that he told Richard Robert Batten (“Batten”), Deloitte’s representative, at the meeting that he was on medication and Batten informed him that he could leave anytime if he was unwell. Wong claimed that he stayed as he wanted to assist in the investigation, and that he gave a short discourse on his concerns on the Audit Investigation process. Wong averred that as Deloitte did not have any queries for him, he asked to leave as he felt unwell. FXS denied that Deloitte did not have any questions for Wong and claimed that before Deloitte could raise numerous irregularities that it had identified from its Audit Investigation for Wong to respond to, Wong said he felt unwell and asked to leave the meeting.⁵

Meanwhile, Deloitte issued a report dated 8 November 2017 (“Deloitte Report”) with its findings on the Audit Investigation which Kizaki claimed revealed irregularities in FXS’ past transactions with I-Connect Interactive Pte Ltd, now known as I-Comtech Interactive Pte Ltd (“I-Connect”), and Supreme Lion Holding Pte Ltd (“Supreme Lion”). Kizaki stated that the Deloitte Report was finalised after the 30 Nov 2017 Meeting and represented Deloitte’s final findings from the Audit Investigation. Separately, the GAD presented its special audit report dated 7 December 2017 (“SA Report”), which Kizaki stated highlighted irregularities in FXS’ transactions with I-Connect, Supreme Lion and one M.O.S. Marine Offshore Services Pte Ltd (“MOS”).⁶ Kizaki stated that the SA Report was received on 10 December 2017.

Wong’s dismissal and clause 10 of Employment Contract

On 21 December 2017, Wong was issued the Termination Notice summarily dismissing him from that date.⁷ The relevant paragraphs of the Termination Notice stated as follows: 2. As you know, [FXS] has been looking into your actions in relation to and your handling of several past transactions for [FXS], including but not limited to the [I-Connect] Project and the [MOS] transaction. 3. [FXS] finds that your actions and/or conduct gives rise to grounds for termination of the Employment Contract with immediate effect pursuant to Clause 10(b), 10(h) and/or 10(i) ... [FXS] hereby summarily dismisses you immediately, without notice, without payment in lieu of notice of compensation, and without any entitlement to the End of Term Payment … 4. Further and/or in the alternative, you are in repudiatory breach of your employment and/or director’s duties owed to [FXS] in law, and our client accepts your breach on an immediate basis.

FXS relied on cll 10(b), (h) and (i) of the Employment Contract to summarily dismiss Wong without notice and without payment in lieu of notice. The relevant paragraphs of cl 10 provide as follows:

[FXS] reserves the right to summarily dismiss you without notice, payment in lieu of notice or compensation if you: … (b) cause material damage to [FXS] whether intentionally or through your negligence; … (h) are, in the reasonable opinion of the [President of Asia Pacific Operations] and/or Board of Directors of [FXS] guilty of gross default or misconduct in connection with or affecting the business of [FXS]; or (i) otherwise act in a manner grossly incompatible with the due and faithful discharge of your duties.

Apart from the Termination Notice, Wong was not given any reasons for his dismissal until he commenced the present suit (“the Suit”) and the Defendants filed their defence and counterclaim.⁸ Wong claims that there was no basis for him to be summarily dismissed, and in any event, FXS had failed to follow its internal procedure for dismissing an employee. Wong further claims, among other things, that the Defendants had conspired to injure him and that FXAP had induced FXS to breach its contract with him.

The Defendants claim that they were entitled to summarily dismiss Wong as he had breached his fiduciary duties, FXS’ company policies and cll 10(b), (h) and (i) of the Employment Contract. They claim that the breaches pertain to transactions that FXS entered into with I-Connect, MOS and Supreme Lion (“the Transactions”), which had caused FXS to suffer loss of some $2,880,385.78. They deny Wong’s other claims.

Preliminary points

Before dealing with the parties’ claims, I make the following observations.

Defendants’ witnesses

The Defendants called Hiroyuki Ino (“Ino”), FXAP’s Senior General Manager of Human Resources, and Kizaki. Ino’s affidavit of evidence-in-chief (“AEIC”) mainly dealt with the quantification of damages and dismissal of executives of FX’s entities. The Defendants rely mainly on Kizaki’s evidence concerning the Transactions. However, neither of them has ever been in FXS and do not have first-hand knowledge about the Transactions, and Kizaki’s involvement in FXAP only began around July 2016 after the Transactions had been executed.⁹ This limited the Defendants’ ability to controvert Wong and his witnesses’ evidence.

FXS’ scope of business

I set out some background on FXS’ scope of business at the time of the Transactions, as the Defendants allege that Wong had caused FXS to enter into transactions outside the scope of its business.

Wong explained that FXS’ business initially centred around wholesale, repair and maintenance of office equipment (“Print Products”) but diversified to include providing financing, infrastructural support and project management, and selling products manufactured by third parties and non-FX-related entities (“TP Products”). In particular, FXS, leveraging its experience in handling complex and large-scale projects, began offering project management services (“Project Management”) around 2001 to 2002. This involved planning a project before commencement, sourcing for and approaching vendors or suppliers (“Suppliers”) and liaising with them, structuring contracts, coordinating with Suppliers and FXS’ customers on the project, and monitoring milestones to ensure the project was completed within timelines. A Project Management transaction might include the sale of FXS products or TP Products.¹⁰

Wong stated that FXAP issued directions requiring him to increase FXS’ revenue and expand its scope of business by all means possible due to market saturation and competition, and FX continually sought to enter new industries. A media release in April 2014 stated that FXS would offer “one-stop financial solutions for businesses” and a “full suite of financial solutions including Hire Purchase/Leasing, Sales and Leaseback Scheme, Credit Control Outsourcing Services, Litigation Services and more”. In other articles and media releases, FXS and its Innovation Office in Singapore were described to be a “consultancy business”, “building analytics”, and expanding into “[w]earable technology, telepresence, artificial intelligence, and even a cloud-based audio tour guide service”. Hence, Wong claimed, FXS or FX was not averse to exploring new markets, products, technologies and services, even if they were unrelated to Print Products. Until the Suit was commenced, FXAP and FX were fully aware and had not objected to FXS entering...