Case Summaries

Beyonics Asia Pacific Limited and others v Goh Chan Peng and another and another appeal (Case Summary)

3 June 2021

Case summary

Beyonics Asia Pacific Limited and others v Goh Chan Peng and another and another appeal [2021] SGCA(I) 2
Civil Appeal Nos 100 and 185 of 2020

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Decision of the Court of Appeal (delivered by Justice of the Court of Appeal Judith Prakash):

Outcome: CoA partially allows the appeal in CA 100/2020, finding that the claims in the suit below should not have been struck out for abuse of process.

Pertinent and significant points of the judgment:

  • Abuse of process is a concept which informs the exercise of the court’s procedural powers. The court controls its processes to ensure that litigants are not vexed by oppressive litigation, but at the same time guards against unjustly depriving a party of the ability to mount a genuine claim (at [50]).
  • Whether abuse of process is found is dependent on the specific facts and circumstances of each case. Even though claims brought in a second suit could have been brought in an earlier suit, that would not be the end of the inquiry (at [51]).
  • The court would consider the conduct of the respondents in running their case in the earlier suit and the appellants’ interests in bringing a genuine claim in deciding whether the appellants’ commencement of the later suit amounted to an abuse of process (at [54], [70]).

Background to the appeal

1          CA 100/2020 arose out of a decision of the International Judge (“Judge”) striking out the appellants’ claims in SIC/S 10/2018 (“S 10”) for being in abuse of process. The Judge also held that most of the claims brought in S 10 would have failed on the merits in any event.

2          Beyonics Asia Pacific Limited (“BAP”) and four other appellants were wholly owned subsidiaries of the Beyonics Group. The first respondent, Mr Goh Chan Peng (“Mr Goh”), is the beneficial owner of the second respondent, Pacific Globe Enterprises Limited (formerly known as Wyser International Limited) (“Wyser”).

3          The first  action to be taken was S 672/2013 (“S 672”) filed in the High Court (“HC”), with Beyonics Technology Ltd (“BTL”), the parent company of the Beyonics Group and another subsidiary as the plaintiffs; and Mr Goh, his wife, Wyser and Wyser Capital Limited as the defendants. BTL alleged that Mr Goh had breached various duties he owed to BTL by diverting business to a competitor NEDEC/KODEC, thereby causing loss of profit (“Diversion Loss”), as well as the loss of profit as a result of the loss of future business with a major customer Seagate (“Total Loss”). The HC Judge found in favour of BTL.

4          On appeal, this Court found that Mr Goh had acted in breach of his duties to BTL. However, there was no legal basis to support the claims for the Diversion Loss and the Total Loss put forward by BTL, as these losses were in fact suffered by BAP.

5         Subsequently, the appellants filed S 10 against Mr Goh and Wyser, claiming both the losses that had been disallowed following the appeal in S 672, as well as additional claims for the reimbursement of bonus granted by BAP (“Unjustified Bonus claim”) and for salaries paid under resignation agreements entered into between Mr Goh and three subsidiaries including BAP (“Unjustified Salaries claim”). Mr Goh argued that S 10 was brought in abuse of process, relying on the extended form of res judicata set out in Henderson v Henderson [1843] 3 Hare 999.

6          The Judge found that S 10 had been brought by the appellants in abuse of process. He further held that, even if the appellants’ claims had not been struck out, they would have failed on the merits in respect of the Diversion Loss and Total Loss claims. However, they would have succeeded on the Unjustified Bonus and Unjustified Salaries claims. The appellants then appealed against the Judge’s decision.

The decision of the Court

7          The Court held that the claims in S 10 were not brought in abuse of process. The respondents’ conduct of the trial proceedings in S 672 was such that they were not able to show that it would be oppressive for them to be subject to S 10. The issue of whether BTL was the proper plaintiff was not a major issue in the trial of S 672, a key contributing factor to this being how the respondents had chosen to run their case. First, the respondents did not plead that the claims in respect of the Diversion Loss and the Total Loss should have been brought by BAP or by any other party, but had instead made only general denials that BTL had a reasonable cause of action or had suffered any loss. Second, the respondents had focussed on the defence that BTL had not suffered such losses as a result of Mr Goh’s alleged breaches of duty and the alleged conspiracy. As a result, right up to the start of the trial and during the trial proceedings, the 672 Plaintiffs were focussed on establishing that the losses claimed had been suffered by BTL. Although the issue of whether BTL was the proper plaintiff was brought up at trial, the respondents did not pursue the point and could even be said to have accepted that the defence was not pleaded (at [55]–[59]).

8          The 672 Plaintiffs would not have been expected to join the appellants at the close of pleadings in S 672. When it came to the trial and the position taken by the respondents on the proper plaintiff became clearer, an application could have been made to add BAP and the other appellants. However, by then proceedings were far advanced, the trial would have had to be adjourned and new pleadings and further discovery would have had to be undertaken. On the basis of the position taken by the HC Judge that the proper plaintiff defence had not been pleaded, as well as their expert witness’ calculation of the Diversion Loss and the Total Loss as being losses of BTL, it was difficult to conclude that Beyonics should have then undertaken such an expensive process which would also lead to considerable delay in the adjudication process (at [57], [66]–[67]).

9          Therefore, considering the respondents’ conduct and the appellants’ interest in bringing a genuine claim before the court, the claims in S 10 should not have been struck out (at [70]).

10        In terms of the substantive merits, the Court held that agreements which were entered into between Mr Goh and NEDEC/KODEC for Mr Goh to receive a net sum of US$200,000 should be rightly characterised as secret commissions, and that Mr Goh had breached his duties to the appellants with regard to these agreements. The Court disagreed with the Judge that Mr Goh’s breaches in relation to the agreements lay only in the structuring of the payments and in his lack of disclosure to the board (at [104], [110]–[113]).

11        Mr Goh’s acts were therefore tainted by these agreements. On the appellants’ case, these acts, amongst others, had cumulatively caused the Diversion Loss and the Total Loss. The question then is whether Mr Goh was able to show that the Diversion Loss and the Total Loss would have occurred in any event regardless of his breaches. In this respect, the Judge’s findings of fact that Mr Goh had acted objectively in the interests of Beyonics amply supported the conclusion that Mr Goh’s breaches did not cause the relevant losses (at [115]).

12        Mr Goh was able to discharge the burden on him to establish that the losses were not due to his actions. Mr Goh did not act wrongfully in entering Beyonics into a collaboration with NEDEC/KODEC (the “BN Alliance”). To the extent to which the BN Alliance may have contributed to the Diversion Loss and the Total Loss, Mr Goh was able to discharge his onus of showing that the same were not due to his decisions which were taken in the interests of Beyonics (at [134]). The same analysis applied to the other assistance rendered by Mr Goh to NEDEC/KODEC (at [140], [141]). The Diversion Loss and Total Loss were therefore not caused by Mr Goh entering into the agreements, and he was therefore not liable for these claims (at [153]). However, Mr Goh was liable to BAP for the Unjustified Bonus claim, as well as BAP and two other subsidiaries in respect of the Unjustified Salaries claims (at [157]).

13        CA 185/2020 was the appellants’ appeal against costs imposed by the Judge. Given that the Court reversed the findings in respect of the abuse of process issue, the costs order for that issue was also reversed. The Court ordered that the respondents pay the appellants’ costs for that issue. As for the substantive merits, there was no reason to disturb the Judge’s costs order as his findings had been substantially upheld (at [161]).

 

This summary is provided to assist in the understanding of the Court’s grounds of decision. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s grounds of decision.