Chun Cheng Fishery v Chuang Hern Hsiung: Breach of Fiduciary Duty and Conspiracy to Injure
In Suit 763/2005, the Singapore High Court heard a claim by Chun Cheng Fishery Enterprise Pte Ltd against Chuang Hern Hsiung and Chuang Hsin-Yi for breach of fiduciary duties and conspiracy to injure the company. The defendants counterclaimed for wrongful termination and brought third-party proceedings against Lin Chao-Feng and Tan Guan Ngo. The High Court granted interlocutory judgment for the plaintiff, finding the defendants liable for breach of duties, conspiracy to injure, and unlawful interference in the plaintiff's business. The defendants' counterclaim and third-party claims were dismissed.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Interlocutory judgment granted for the plaintiff for damages for the first and second defendants’ breach of contractual and fiduciary duties, conspiracy to injure and unlawful interference in the plaintiff’s business.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The High Court found Chuang Hern Hsiung and Chuang Hsin-Yi liable for breaching fiduciary duties and conspiring to injure Chun Cheng Fishery, causing financial distress.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Chun Cheng Fishery Enterprise Pte Ltd | Plaintiff | Corporation | Interlocutory judgment granted | Partial | Tan Cheng Han, Lim Kim Hong |
| Chuang Hern Hsiung | Defendant | Individual | Liable for breach of duties and conspiracy to injure | Lost | Molly Lim, Philip Lim |
| Chuang Hsin-Yi | Defendant | Individual | Liable for breach of duties and conspiracy to injure | Lost | Molly Lim, Philip Lim |
| Lin Chao-Feng | Third Party | Individual | Claims dismissed | Won | Tan Cheng Han, Lim Kim Hong |
| Tan Guan Ngo | Third Party | Individual | Claims dismissed | Won | Tan Cheng Han, Lim Kim Hong |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Andrew Ang | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Tan Cheng Han | Tan Cheng Han |
| Lim Kim Hong | Kim & Co |
| Molly Lim | Wong Tan & Molly Lim LLC |
| Philip Lim | Wong Tan & Molly Lim LLC |
| Yong Kwet Leong | Yong & Partners |
4. Facts
- First defendant restricted the cash flow of the plaintiff by refusing to sign or accept offers of credit from the bankers.
- Defendants caused the overstocking of inventory in Chun Cheng USA Inc.
- Defendants diverted funds to Bank of Taiwan.
- First defendant failed to clarify the status of Lin’s personal debts to the plaintiff’s bankers.
- First defendant made misrepresentations to United Overseas Bank about the plaintiff.
- Defendants gained unauthorised access to the e-mail accounts of Lin, Tan and Lay Hoon.
- Defendants made unauthorised modifications to their respective laptops after the termination of their employment.
5. Formal Citations
- Chun Cheng Fishery Enterprise Pte Ltd v Chuang Hern Hsiung and Another (Lin Chao-Feng and Another, Third Parties), Suit 763/2005, [2008] SGHC 135
6. Timeline
| Date | Event |
|---|---|
| First defendant took over effective control of the plaintiff. | |
| Lin sensed that the first defendant was deliberately refusing access to information. | |
| Lin disapproved of the first defendant’s sales target for 2005. | |
| Low obtained an offer of a temporary line of credit for the plaintiff from Standard Chartered Bank. | |
| First defendant refused to sign acceptance of a Development Bank of Singapore offer of an increase in facilities. | |
| Low was informed by James Hsu from Bank of Taiwan that the plaintiff’s credit facilities were to be suspended. | |
| Plaintiff received a formal letter from Chiao Tung Bank stating that their credit facilities were suspended. | |
| First defendant raised concerns regarding the plaintiff’s operations with United Overseas Bank. | |
| Both defendants had their employment terminated. | |
| Lin discovered that a further sum had been directly remitted to the plaintiff’s account with Bank of Taiwan from Eurocell, Europe. | |
| Plaintiff held a joint bankers’ conference to dispel the rumours and to answer questions that the bankers had. | |
| Chee Yoh Chuang of Chio Lim & Associates was appointed the Special Accountant. | |
| Defendants incorporated a company of their own – Seaspire International Pte Ltd. | |
| Second defendant was informed through the plaintiff’s solicitors that his termination of employment would be treated as a summary dismissal as well. | |
| Decision Date |
7. Legal Issues
- Breach of Fiduciary Duty
- Outcome: The court found that the defendants breached their fiduciary duties to the plaintiff through various acts and omissions.
- Category: Substantive
- Sub-Issues:
- Conflict of interest
- Failure to act in good faith
- Failure to exercise reasonable care and skill
- Conspiracy to Injure
- Outcome: The court found the defendants liable for conspiracy to injure the plaintiff.
- Category: Substantive
- Sub-Issues:
- Agreement to injure
- Unlawful means
- Intention to injure
- Wrongful Dismissal
- Outcome: The court dismissed the defendants’ counterclaim for wrongful dismissal.
- Category: Substantive
8. Remedies Sought
- Damages
9. Cause of Actions
- Breach of Fiduciary Duty
- Conspiracy to Injure
- Unlawful Interference with Business
10. Practice Areas
- Commercial Litigation
11. Industries
- Fishery
- Marine Products
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Universal Westech (S) Pte Ltd v Ng Thiam Kiat | High Court | Yes | [1997] 2 SLR 139 | Singapore | Cited regarding the breach of duty by a director who was an employee of the plaintiff company, in taking preparatory steps to set up a competing business. |
| Laughton v BAPP Industrial Supplies Ltd | Peter Gibson J | Yes | [1986] ICR 634 | England and Wales | Cited regarding the breach of duty by employees who wrote to their employer’s suppliers asking them for their product lists, price lists and the terms on which their products could be supplied with a view to the employees setting up their own business in the future. |
| Quah Kay Tee v Ong & Co Pte Ltd | Court of Appeal | Yes | [1997] 1 SLR 390 | Singapore | Cited regarding the two types of actionable conspiracy – conspiracy to injure by lawful means and conspiracy to injure by unlawful means. |
| Seagate Technology Pte Ltd v Goh Han Kim | Court of Appeal | Yes | [1995] 1 SLR 17 | Singapore | Cited regarding the essence of conspiracy is an agreement, and the question is whether the appellants had proved that there was in existence an agreement or at least some arrangement between the respondent and Heng to defraud the first appellants; and a high degree of proof is required. |
| Kuwait Oil Tanker Co SAK v Al Bader | Court of Appeal | Yes | [2000] 2 All ER Comm 271 | England and Wales | Cited regarding the tort of conspiracy, which is also found in criminal conspiracies, is that, it is not necessary to show that there is anything in the nature of an express agreement, whether formal or informal. |
| Beckkett Pte Ltd v Deutsche Bank AG | Unknown | Yes | [2008] 2 SLR 189 | Singapore | Cited regarding Kuwait Oil Tanker Co SAK v Al Bader [2000] 2 All ER Comm 271 CA. |
13. Applicable Rules
| Rule Name |
|---|
| Order 16 r 1 of the Rules of Court |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| No applicable statutes | |
15. Key Terms and Keywords
15.1 Key Terms
- Fiduciary duty
- Conspiracy to injure
- Unlawful interference
- Overstocking
- Credit facilities
- Moratorium period
- Insiders’ team
- Hai Vuong transaction
- Personal indebtedness
- Remittance instruction forms
15.2 Keywords
- Breach of Fiduciary Duty
- Conspiracy to Injure
- Marine Products
- Singapore
- High Court
16. Subjects
- Breach of Contract
- Breach of Duty
- Conspiracy
- Torts
17. Areas of Law
- Tort
- Companies
- Fiduciary Duty
- Conspiracy
- Contract Law