Yaku Shin (JB) Sdn Bhd v Panasonic AVC Networks Singapore Pte Ltd and Another

• Jurisdiction: Singapore
• Judge: Woo Bih Li J
• Judgment Date: 06 June 2008
• Neutral Citation: [2008] SGHC 87
• Docket Number: Suit No 379 of 2006
• Date: 06 June 2008
• Published date: 11 June 2008
• Year: 2008
• Plaintiff Counsel: Manjit Singh and Sree Govind Menon (Manjit Govind & Partners)
• Citation: [2008] SGHC 87
• Defendant Counsel: Tan Teck Wang, Melvin See and Sharon Liu (Rodyk & Davidson LLP)
• Court: High Court (Singapore)
• Subject Matter: Restitution,Whether contract needed before claim on quantum meruit might be made,Quantum meruit,Contingent counterclaim on quantum meruit

6 June 2008 Judgment reserved.

Woo Bih Li J:

Introduction

1 The plaintiff, Yaku Shin (JB) Sdn Bhd (“YKJB”) is a Malaysian company operating from Johor Bahru. Until March 2006, it was related to another company Yaku Shin (M) Sdn Bhd (“YKM”), a Malaysian company operating from Kuala Lumpur. YKM will feature prominently in the dispute before me. Both YKM and YKJB had at all material times the same parent company, ie, Foremost Holdings Bhd, which held 58.75% of the capital in each of these two companies. At all material times, YKM and YKJB had the same managing director, one Teh Hong Beng (“Teh”).

2 The first defendant, Panasonic AVC Networks Singapore Pte Ltd (“PS”) is a company incorporated in Singapore. The second defendant is Panasonic Manufacturing Xiamen Co Ltd (“PX”), a company incorporated in China. Both of these companies are part of the Panasonic group of companies.

3 The Panasonic group of companies operate a production supply chain. Component parts are first manufactured by or for a Panasonic company. The component parts are then sent to another party for assembly into semi-products (“the goods”). The goods are in turn assembled into final products by a Panasonic company.

4 YKJB’s claim is against PS only. Its original claim, before any set-off, was for the purchase price of US$1,286,299.29 for the goods supplied by YKJB to PS under 96 transactions for five months from September 2005 to February 2006. YKJB’s claim is based on contract and, alternatively, on quantum meruit.

5 However, YKJB accepts that the price of components delivered for the account of PS to YKJB between December 2005 to February 2006, amounting to US$236,754.15, is to be deducted from YKJB’s claim although not the price for the components delivered to YKJB between September and October 2005.

6 On 26 July 2006, after the issuance of the Writ of Summons, PS paid US$85,768.52 to YKJB. This sum represented the total of YKJB’s invoices issued in 2006 (US$196,040.39) less the total value of the components supplied to YKJB in 2006 (US$110,271.87). Therefore, the 2006 supply of the goods by YKJB and the 2006 supply of components to YKJB are no longer in dispute. The price for components delivered in December 2005 to YKJB was US$126,482.28.

7 The remaining sum from YKJB’s original claim is:

US$1,286,299.29

Less:

(a) Components delivered in 2006 110,271.87

(b) payment for 2006 goods less 2006 components 85,768.52

(c) December 2005 components 126,482.28
US$ 963,776.62

I should mention that this claim of US$963,776.62 includes a sum of US$540,538.95 that PS has already paid to YKM in circumstances which I shall elaborate on later. If the latter sum is deducted, the balance will be US$423,237.67, which is less than the combined counterclaims of PS and PX, (see [8] and [9] below).

8 PS does not dispute that it received the goods from September to December 2005 from YKJB. However, its position is that, prior to 2006, the supply of such goods was pursuant to a contract between PS and YKM. Accordingly, YKM is the party it is liable to. Alternatively, if the contract was with YKJB, PS has a counterclaim for the price of components supplied to YKJB between October and December 2005. This counterclaim is therefore a contingent one based on the possibility that the court may find that the contract was between PS and YKJB. The counterclaim is based on quantum meruit only and not on contract because, apparently, when PS sought to amend its defence to include a counterclaim, an assistant registrar declined to allow it to include a counterclaim based on contract. PS’s counterclaim amounts to US$372,278.48. However, this includes components supplied to YKJB in December 2005 for which credit has already been given by YKJB, (see [7] above). After deducting US$126,482.28 for the December 2005 components, PS’s counterclaim should be for US$245,796.20.

9 PX is also making a contingent counterclaim for US$360,838.76, being the price of components supplied by it to YKJB between July and November 2005, if the court finds that PX’s contract was with YKJB and not with YKM. However, PX’s counterclaim is based on contract and, alternatively, on quantum meruit.

10 YKJB relied simply on the fact that it was undisputed that it had assembled the goods and delivered them to PS or its agents and that its invoices and delivery orders had been issued to PS without objection from PS. YKJB distanced itself from any earlier agreement signed by YKM if YKJB was not a party to such agreement. YKJB’s position was that it was not bound by any such agreement. However, YKJB’s approach was overly simplistic as I shall elaborate below. I would add that a court must consider the entire evidence and not just isolated pieces of evidence.

Background, submissions and conclusion

11 In an agreement dated 6 June 1995 (“the Basic Contract”) between PS (under its old name) and YKM, the parties thereto agreed to various basic terms for PS’s purchase of the goods from YKM. Clause 24 of the Basic Contract provided for PS to lend machinery, equipment, tools, measurement instruments and moulding die, referred to as “Tool and Die” to YKM which were not to be re-lent without the consent of PS.

12 An agreement dated 1 October 2003 (“the 2003 Tri-Party Agreement”) between PS, YKM and Panasonic Taiwan Co Ltd (“Panasonic Taiwan”) provided for the sale of loud speakers by PS to YKM which would be used by YKM to assemble the goods for Panasonic Taiwan. The 2003 Tri-Party Agreement also allowed PS to seek payment from Panasonic Taiwan if YKM failed to make payment to PS.

13 An agreement dated 1 October 2004 (“the 2004 Tri-Party Agreement”) between Panasonic Taiwan, YKJB and Panasonic AVC Networks Johor Malaysia Sdn Bhd (“Panasonic JB”) provided for the sale of loud speakers by Panasonic Taiwan to YKJB which would be used by YKJB to assemble the goods for Panasonic JB. The 2004 Tri-Party Agreement also allowed Panasonic Taiwan to seek payment from Panasonic JB if YKJB failed to make payment to Panasonic Taiwan.

14 An agreement between PS, YKM and PX dated 1 April 2005 (“the 2005 Tri-Party Agreement”) provided for the sale of loud speakers by PS to YKM which would be used by YKM to assemble the goods for PX. The 2005 Tri-Party Agreement also allowed PS to seek payment from PX if YKM failed to make payment to PS.

15 As is evident, YKJB was a party only to the 2004 Tri-Party Agreement. I should also mention that the Basic Contract expired, according to its terms, on 5 June 2000. YKJB repeatedly submitted that PS had suppressed this fact. I do not agree that PS had suppressed this fact. True, it did not draw the court’s attention to this fact but it did refer to and disclose the Basic Contract. YKJB would easily have learned from the Basic Contract about the expiry date. Besides, as I mentioned, YKJB and YKM had the same managing director at all material times. In my view, YKJB’s accusation about suppression was part of its overall strategy to cast PS in the worst possible light.

16 Although the Basic Contract expired on or about 5 June 2000, it was the case of PS that the parties thereto continued to act on the terms of the Basic Contract although there was no express reference to estoppel by convention in the pleadings of PS. So, for the pre-January 2006 transactions, paragraph 10 of the Defence and Counterclaim (Amendment No. 3) of PS states:

Pursuant to the Basic Contract, and the 2003 and 2005 Tri-Party Agreements [Panasonic Singapore] issued purchase orders to [YKM] for the supply of semi-products …

17 The only witness for YKJB was Koid Hung Kuan (“Koid”) and not Teh as one might have expected. Although records showed that Koid was appointed a director of YKJB only on 30 March 2006, he said that he was a proxy director (perhaps meaning an alternate director) from 2 March 2006.[note: 1] While he said that he was involved in the business of YKJB from 5 November 2005, he clarified that he was not running it then.[note: 2] He accepted that Teh was running YKJB before 15 November 2005 and up to February 2006.[note: 3] The date of 15 November 2005 is significant in the factual matrix because that is the date when Receivers and Managers (“R&M”) of YKM were appointed.

18 It was Koid’s own evidence that YKJB had been assembling the goods supplied to PS since January 2005.[note: 4] This is significant because YKJB was repeatedly submitting that it was brought or drawn into the picture (only) from September 2005 when YKM was facing financial difficulties.

19 The witnesses for PS were:

(a) Ngoh Cherng Fah (“Ngoh”), General Manager of its Global Procurement Centre;

(b) Chua Kim Hong, its Information Technology Manager;

(c) Hu Shiliang (“Hu”), an Assistant Senior Executive;

(d) Teoh Boon Lean (“Teoh”), the Sales & Marketing Manager of Supportive Technology Sdn Bhd (“Supportive”); and

(e) Adeline Chan Wai Leng, a trainer with BeXcom Southeast Asia Pte Ltd.

20 The witness for PX was Chen Chung Hsing (“Chen”), the department manager of the Electronic Device Sales Department, Device Technology Domain Business, Panasonic Taiwan which is a subsidiary of PX.

21 The evidence, primarily from PS and PX, was as follows:

(a) All along since the Basic Contract, PS would issue its purchase orders through an internal portal referred to as the “e-Procurement” system. Therefore, it was only through access to this system that one would know what the purchase order of PS was.

(b) Only YKM was issued with an identification (“ID”) and password to gain access to this system. YKJB was not issued its own ID and password.

(c) PS had lent Tool and Die equipment to YKM for the assembly of the goods. From Koid’s evidence, YKJB was using such Tool and Die equipment.

(d) YKJB was issuing purchase orders (under YKJB’s letterhead) to PX for components to be used in the assembly of the goods and PX’s invoices were addressed to YKJB. However, payment was being made not by YKJB but by YKM to PX.

(e) PS required the issuance of...