Man Financial v Wong: Breach of Non-Solicitation Clause & Restraint of Trade

Man Financial (S) Pte Ltd, formerly known as E D & F Man International (S) Pte Ltd, appealed a decision in favor of Wong Bark Chuan David regarding benefits under a Termination Agreement. The Court of Appeal, comprising Belinda Ang Saw Ean J, Andrew Phang Boon Leong JA, and V K Rajah JA, heard the case on 29 November 2007. The primary legal issue was whether Wong breached a non-solicitation clause in the Termination Agreement and whether the doctrine of restraint of trade applied. The court found that Wong did breach the non-solicitation clause, that the clause was reasonable, and therefore Man Financial was entitled to terminate the agreement. The Court allowed the appeal.

1. Case Overview

1.1 Court

Court of Appeal

1.2 Outcome

Appeal Allowed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Man Financial sued Wong for breach of a non-solicitation clause. The court examined the doctrine of restraint of trade and its application.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Man Financial (S) Pte Ltd (formerly known as E D & F Man International (S) Pte Ltd)AppellantCorporationAppeal AllowedWon
Wong Bark Chuan DavidRespondentIndividualAppeal DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Belinda Ang Saw EanJudgeNo
Andrew Phang Boon LeongJustice of the Court of AppealYes
V K RajahJustice of the Court of AppealNo

4. Counsels

Counsel NameOrganization
Andre Francis ManiamWongPartnership
Alvin Yeo Khirn HaiWongPartnership
Neo Ling Chien JaclynWongPartnership
Ameera AshrafWongPartnership
Goh Chun Kiat ColinWongPartnership
Lin Shuling JoycelynKhattarWong
Chia Ho ChoonKhattarWong
Spring TanKhattarWong

4. Facts

  1. The respondent was the managing director and CEO of the appellant.
  2. The respondent suggested a change of role in May 2005.
  3. The appellant decided to replace the respondent as CEO in June 2005.
  4. The respondent was placed on "garden leave" from 13 June 2005.
  5. The respondent was handed a proposed termination agreement on 13 June 2005.
  6. The Termination Agreement was executed on 23 June 2005, dated 13 June 2005.
  7. The appellant was informed that the respondent had solicited the employment of its employees for a competing company.

5. Formal Citations

  1. Man Financial (S) Pte Ltd (formerly known as E D & F Man International (S) Pte Ltd) v Wong Bark Chuan David, CA 17/2007, [2007] SGCA 53

6. Timeline

DateEvent
Respondent became managing director and CEO of the appellant.
Respondent suggested a change of role.
Respondent was placed on "garden leave" and handed a proposed termination agreement.
Termination Agreement executed.
Appellant was informed that the respondent had solicited the employment of its employees.
End of the prohibited period under the Termination Agreement.
Judgment reserved.

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court found that the respondent breached the non-solicitation clause.
    • Category: Substantive
    • Sub-Issues:
      • Breach of non-solicitation clause
      • Failure to comply with contractual terms
  2. Restraint of Trade
    • Outcome: The court held that the non-solicitation clause was a reasonable restraint of trade.
    • Category: Substantive
    • Sub-Issues:
      • Reasonableness of restrictive covenants
      • Legitimate proprietary interest
      • Public policy
  3. Termination of Contract
    • Outcome: The court held that the appellant was entitled to terminate the contract due to the respondent's breach.
    • Category: Substantive
    • Sub-Issues:
      • Entitlement to terminate contract
      • Consequences of breach

8. Remedies Sought

  1. Compensation under Termination Agreement

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Commercial Litigation
  • Employment Law
  • Contract Disputes

11. Industries

  • Financial Services

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Wong Bark Chuan David v Man Financial (S) Pte LtdHigh CourtYes[2007] 2 SLR 22SingaporeThe trial judge's decision which was appealed against in this case.
Herbert Morris, Limited v SaxelbyHouse of LordsYes[1916] 1 AC 688EnglandCited as a leading case on the doctrine of restraint of trade in employment relations.
Nagle v FeildenEnglish Court of AppealYes[1966] 2 QB 633EnglandCited for the principle that a man's right to work is important and will be protected by the courts.
Thorsten Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Company, LimitedHouse of LordsYes[1894] AC 535EnglandCited as the classic statement of the law on restraint of trade.
Vancouver Malt and Sake Brewing Company, Limited v Vancouver Breweries, LimitedPrivy CouncilYes[1934] AC 181British ColumbiaCited for the principle that there cannot be a bare restriction of trade.
Faccenda Chicken Ltd v FowlerEnglish Court of AppealYes[1987] Ch 117EnglandCited for guidelines on ascertaining whether something constitutes a trade secret.
Tang Siew Choy v Certact Pte LtdCourt of AppealYes[1993] 3 SLR 44SingaporeCited for endorsing the principles in Faccenda Chicken.
Stratech Systems Ltd v Nyam Chiu ShinCourt of AppealYes[2005] 2 SLR 579SingaporeCited for the proposition that trade secrets must be specifically pleaded.
National Aerated Water Co Pte Ltd v Monarch Co, IncCourt of AppealYes[2000] 2 SLR 24SingaporeCited for endorsing the approach of the majority in Esso Petroleum in the context of a licensing agreement.
Panayiotou v Sony Music Entertainment (UK) LimitedEnglish High CourtYes[1994] EMLR 229EnglandCited for the principle that there is a public interest in upholding genuine compromises.
Thomas Cowan & Co Ltd v OrmeHigh CourtYes[1961] MLJ 41SingaporeCited for distinguishing between the two aspects of reasonableness in Lord Macnaghten's statement of principle in Nordenfelt.
Pherdzaha Maneekji Framroz v Nowroji Rustamji MistriStraits Settlements High CourtYes[1932] MLJ 96SingaporeCited as a relatively early decision applying Nordenfelt.
VSL Prestressing (Australia) Pty Ltd v MulhollandHigh CourtYes[1969-1971] SLR 527SingaporeCited for characterizing Lord Macnaghten's statement of principle in Nordenfelt as being "laid down in the clearest and most happily selected language".
Heller Factoring (Singapore) Ltd v Ng Tong YangHigh CourtYes[1998] 3 SLR 299SingaporeCited for the importance of Singapore's small physical size in considering area restrictions.
Hanover Insurance Brokers Ltd v SchapiroEnglish Court of AppealYes[1994] IRLR 82EnglandCited as an authority that takes a contrary view on non-solicitation clauses.
Kearney v CrepaldiNew South Wales Supreme CourtYes[2006] NSWSC 23AustraliaCited for the view that a non-solicitation covenant may not be justified simply by the employer's interest in maintaining a stable trained workforce.
Cactus Imaging Pty Limited v Glenn PetersNew South Wales Supreme CourtYes[2006] NSWSC 717AustraliaCited for the reasoning that the maintenance of a stable, trained workforce is a legitimate proprietary interest.
RDC Concrete Pte Ltd v Sato Kogyo (S) Pte LtdCourt of AppealYes[2007] 4 SLR 413SingaporeCited for the applicable legal principles relating to the consequences of a breach of contract.
L Schuler AG v Wickman Machine Tool Sales LtdHouse of LordsYes[1974] AC 235EnglandCited for the principle that the express use of the word "condition" might be insufficient to render that term a condition in law.
Bunge Corporation, New York v Tradax Export SA, PanamaHouse of LordsYes[1981] 1 WLR 711EnglandCited as a general House of Lords decision supporting the approach that the condition-warranty approach should take precedence over the Hongkong Fir approach.
Maredelanto Compania Naviera SA v Bergbau-Handel GmbHEnglish Court of AppealYes[1971] 1 QB 164EnglandCited for the principle that a prior precedent is available.
Sandar Aung v Parkway Hospitals Singapore Pte LtdCourt of AppealYes[2007] 2 SLR 891SingaporeCited for the principle that negotiations can be considered as they constituted part of the factual matrix surrounding the Termination Agreement itself.
Practice Statement (Judicial Precedent)Court of AppealYes[1994] 2 SLR 689SingaporeCited for the principle that the Court of Appeal is permitted to depart from its own prior decisions pursuant to the criteria set out in this Practice Statement.
A Buckle & Son Pty Ltd v McAllisterNew South Wales Law ReportsYes[1986] 4 NSWLR 426AustraliaCited for the principle that some restrictions on post-employment competition may be justified by the benefit gained or to be gained by the employee through his contract of employment.
Buckman Laboratories (Asia) Pte Ltd v Lee Wei HoongHigh CourtYes[1999] 3 SLR 333SingaporeCited for the principle that an invalid clause cannot be saved by clauses of this nature.
Asiawerks Global Investment Group Pte Ltd v Ismail bin Syed AhmadHigh CourtYes[2004] 1 SLR 234SingaporeCited for the principle that there is an implied term in the employer's favor that the employee will serve the employer with good faith and fidelity.
Torvald Klaveness A/S v Arni Maritime CorporationHouse of LordsYes[1994] 1 WLR 1465EnglandCited as a general House of Lords decision supporting the approach that the condition-warranty approach should take precedence over the Hongkong Fir approach.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Application of English Law Act (Cap 7A, 1994 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Non-solicitation clause
  • Restraint of trade
  • Termination Agreement
  • Condition
  • Goodwill payment
  • Legitimate proprietary interest
  • Stable trained workforce

15.2 Keywords

  • contract
  • employment
  • restraint of trade
  • non-solicitation
  • termination agreement

17. Areas of Law

Area NameRelevance Score
Restraint of Trade95
Contract Law90
Non-Solicitation Clause80
Employment Law70

16. Subjects

  • Contract Law
  • Employment Law
  • Restraint of Trade