Hup Huat Food Industries v Liang Chiang Heng: Breach of Fiduciary Duty and Trademark Infringement

Hup Huat Food Industries (S) Pte Ltd sued Liang Chiang Heng, Liang Kim Poh, Koh Tong Chye Jenson, Tan Kwang Heng, and Ban Hock Trading Pte Ltd in the High Court of Singapore, alleging breach of fiduciary duties, conspiracy, trademark infringement, and passing off. The court, presided over by Justice Tay Yong Kwang, dismissed the plaintiff's claims against all defendants except for a claim against the fifth defendant for S$158,331.75, finding that the plaintiff had decided to close its business and there was no exclusive distributorship agreement.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Plaintiff's claim against all the defendants dismissed with costs, except for the claim against the fifth defendant for S$158,331.75.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore court case regarding breach of fiduciary duties by company directors and trademark infringement related to 'Apollo' food products. Claims against defendants dismissed.

1.7 Decision Date

16 October 2003

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Hup Huat Food Industries (S) Pte Ltd	Plaintiff	Corporation	Claim Dismissed	Lost	Hee Theng Fong of M/s Hee Theng Fong & Co Tay Wee Chong of M/s Hee Theng Fong & Co Doris Damaris Lee of M/s Hee Theng Fong & Co
Liang Chiang Heng	Defendant	Individual	Claim Dismissed	Won	Sim Chong of Drew & Napier LLC Tan Mei Yen of Drew & Napier LLC Manoj Sandrasegara of Drew & Napier LLC Yarni Loy of Drew & Napier LLC
Liang Kim Poh	Defendant	Individual	Claim Dismissed	Won	Sim Chong of Drew & Napier LLC Tan Mei Yen of Drew & Napier LLC Manoj Sandrasegara of Drew & Napier LLC Yarni Loy of Drew & Napier LLC
Koh Tong Chye Jenson	Defendant	Individual	Claim Dismissed	Won	Lai Kwok Seng of M/s Lai Mun Onn & Co
Tan Kwang Heng	Defendant	Individual	Claim Dismissed	Won	Lai Kwok Seng of M/s Lai Mun Onn & Co
Ban Hock Trading Pte Ltd	Defendant	Corporation	Partial Judgment	Partial	Liew Yik Wee of M/s Wong Partnership Andre Maniam of M/s Wong Partnership Vanessa Lim of M/s Wong Partnership

3. Judges

Judge Name	Title	Delivered Judgment
Tay Yong Kwang	Judge	Yes

4. Counsels

Counsel Name	Organization
Hee Theng Fong	M/s Hee Theng Fong & Co
Tay Wee Chong	M/s Hee Theng Fong & Co
Doris Damaris Lee	M/s Hee Theng Fong & Co
Sim Chong	Drew & Napier LLC
Tan Mei Yen	Drew & Napier LLC
Manoj Sandrasegara	Drew & Napier LLC
Yarni Loy	Drew & Napier LLC
Lai Kwok Seng	M/s Lai Mun Onn & Co
Liew Yik Wee	M/s Wong Partnership
Andre Maniam	M/s Wong Partnership
Vanessa Lim	M/s Wong Partnership

4. Facts

The plaintiff, Hup Huat Food Industries, imported and exported 'Apollo' food products.
The Liang brothers, minority shareholders, were directors of the plaintiff until March 31, 2002.
The plaintiff claimed the Liang brothers breached fiduciary duties by causing the business to close and diverting business.
The plaintiff alleged the Liang brothers paid themselves remuneration without shareholder approval.
The plaintiff claimed the first defendant misappropriated US$49,800.
The plaintiff claimed all defendants conspired to harm the plaintiff by diverting business.
The plaintiff claimed trademark infringement and passing off against the fifth defendant.
The shareholders resolved to close the company’s export business at the AGM on January 7, 2002.
There was no written exclusive distributorship agreement between AFI and the plaintiff.

5. Formal Citations

Hup Huat Food Industries (S) Pte Ltd v Liang Chiang Heng and Others, Suit 1110/2002, [2003] SGHC 244

6. Timeline

Date	Event
2000-08-01	Sale of the plaintiff’s building.
2002-01-07	Annual General Meeting of the plaintiff.
2002-01-09	Liang brothers began retrenching all the plaintiff’s staff.
2002-01-14	Third defendant set up Taisan.
2002-02-01	Second defendant issued the first purchase orders for Taisan to AFI.
2002-02-01	Tan Song Cheng wrote to the company secretary regarding the draft minutes of the AGM.
2002-02-06	First defendant drew US$49,800 from the plaintiff’s account.
2002-02-21	Tan Song Cheng wrote two letters to the company secretary requesting an EGM.
2002-03-15	Extraordinary General Meeting held; Tan Kok Guan appointed a director; Tan Song Cheng appointed Executive Chairman and Finance Director.
2002-03-22	Tan Song Cheng instructed solicitors to write to the Liang brothers regarding their resignation.
2002-03-22	Tan Song Cheng asked solicitors to write to the company secretary about the draft minutes of the AGM.
2002-03-25	Company secretary replied to Tan Song Cheng’s solicitors regarding the AGM minutes.
2002-03-27	Fourth defendant became the sole proprietor of Taisan.
2002-06-01	Tan Song Cheng discovered the Liang brothers’ remuneration for the financial year ending on 31 December 2001 was $183,794.
2002-06-01	Taisan started to use the premises of the Liang brothers at the Ang Mo Kio Industrial Park as its office.
2002-07-01	Fifth defendant stopped purchasing Apollo products from the plaintiff.
2002-07-05	EGM regarding directors’ remuneration.
2002-08-23	Fifth defendant began selling Apollo products using the plaintiff’s trademark and name as importer.
2002-08-30	First defendant encashed travellers’ cheques in the casino on board a Star Cruise ship.
2002-09-01	First defendant encashed travellers’ cheques in the casino on board a Star Cruise ship.
2002-09-01	Plaintiff’s local business ceased altogether.
2002-09-06	Tan Song Cheng wrote to the company’s auditors to reverse the sum of US$49,800 from the sales discount account to the first defendant’s directors’ loan account.
2002-09-01	AFH issued circulars to shareholders for the proposed renewal of the shareholders’ mandate for recurrent related transactions.
2002-10-01	AFH issued circulars to shareholders for the proposed renewal of the shareholders’ mandate for recurrent related transactions.
2002-10-10	First defendant disputed that the amount of S$91,134 was due and owing from him to the company.
2003-02-01	The address of Hiang Li Engineering Pte Ltd still appeared as the address of Taisan in AFI’s invoice to Taisan.
2003-03-01	Allegation of misappropriation added to the Statement of Claim.
2003-10-17	Decision Date

7. Legal Issues

Breach of Fiduciary Duty
- Outcome: The court held that the Liang brothers were not in breach of their fiduciary duties.
- Category: Substantive
- Sub-Issues:
  - Wrongfully causing closing down of plaintiff's business
  - Wrongful diversion of business
  - Paying remuneration without shareholder approval
  - Misappropriation of company money
Trademark Infringement
- Outcome: The court held that there was no trademark infringement by the fifth defendant.
- Category: Substantive
Passing Off
- Outcome: The court held that there was no passing off by the fifth defendant.
- Category: Substantive
Conspiracy to do Harm
- Outcome: The court held that the claim of conspiracy failed.
- Category: Substantive
Dishonest Assistance
- Outcome: The court held that the claim of dishonest assistance failed.
- Category: Substantive

8. Remedies Sought

Monetary Damages
Injunction

9. Cause of Actions

Breach of Fiduciary Duty
Conspiracy
Dishonest Assistance
Trademark Infringement
Passing Off

10. Practice Areas

Commercial Litigation
Intellectual Property Law

11. Industries

Food Industry

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Cane v Jones & Ors	N/A	Yes	[1980] 1 WLR 1451	N/A	Cited for the principle that resolutions can be constituted by the informal assent of all members of the company regardless of whether or not there is a formal meeting or proper notice.
Jimat bin Awang & Ors v Lai Wee Ngen	High Court	Yes	[1995] 3 SLR 769	Singapore	Cited for the principle that resolutions can be constituted by the informal assent of all members of the company regardless of whether or not there is a formal meeting or proper notice.
Revlon Inc v Cripps & Lee Ltd & Ors	N/A	Yes	[1980] FSR 85	N/A	Cited to support the argument that parallel import of genuine products is not an infringement of trademark where the trademark has become a house mark of a group.
Fender Australia Pty Ltd v BEVK trading as Guitar Crazy	N/A	No	(1989) ALR 89	Australia	Cited to distinguish the present case from one where the applicant had its own local goodwill associated with the trademark.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
s 157 Companies Act	Singapore
s 22 Trademarks Act	Singapore
s 29(1) Trademarks Act	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Apollo trademark
Fiduciary duty
Directors' remuneration
Diversion of business
Closing down business
Exclusive distributorship
Travellers’ cheques
Related party transactions
Passing off
Trademark infringement

15.2 Keywords

Apollo
Biscuits
Confectionery
Trademark
Fiduciary Duty
Singapore
Companies Act
Directors
Shareholders

17. Areas of Law

Area Name	Relevance Score
Fiduciary Duties	80
Company Law	75
Trademarks	60
Passing Off	60
Commercial Disputes	50
Fraud and Deceit	40
Misrepresentation	30
Trust Law	25

16. Subjects

Company Law
Intellectual Property
Contract Law