Goh Eng Wah v Daikin Industries: Incentive Scheme Dispute & Contractual Obligations

Goh Eng Wah sued Daikin Industries Ltd, Daikin Airconditioning (Singapore) Pte. Ltd., and the Chua brothers (Robert Chua Teck Chew, Chua Teck Meng, and Chua Tiak Seng Charlie) in the High Court of Singapore, alleging a shortfall in payments due to him under an Incentive Scheme. The court, presided over by Lai Siu Chiu J, found that the Incentive Scheme was an agreement between Daikin Industries and the local shareholders, including Goh Eng Wah, to induce their agreement to Daikin acquiring a majority stake in Daikin Airconditioning (Singapore). The court allowed the claim against Robert Chua Teck Chew for breach of the Incentive Scheme's terms, but dismissed the claims against the other defendants.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Plaintiff's claim allowed against the third defendant (Robert Chua Teck Chew) for breach of the terms of the Incentive Scheme; claim dismissed against the first, second, fourth, and fifth defendants.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Goh Eng Wah sues Daikin Industries over a shortfall in payments under an Incentive Scheme. The court examines the parties' obligations and contractual terms.

1.7 Decision Date

30 October 2008

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Goh Eng Wah	Plaintiff	Individual	Claim allowed in part	Partial	Davinder Singh of Cheo Yeoh & Associates LLC Shobna Chandran of Cheo Yeoh & Associates LLC Hri Kumar of Cheo Yeoh & Associates LLC Johnny Cheo Chai Beng of Cheo Yeoh & Associates LLC
Daikin Industries Ltd	Defendant	Corporation	Claim Dismissed	Dismissed	Anna Oei of Tan Oei & Oei LLC Chen Wei Ling of Tan Oei & Oei LLC
Daikin Airconditioning (Singapore) Pte. Ltd. Formerly known as A.C.E. Daikin (Singapore) Pte Ltd	Defendant	Corporation	Claim Dismissed	Dismissed	Anna Oei of Tan Oei & Oei LLC Chen Wei Ling of Tan Oei & Oei LLC
Robert Chua Teck Chew	Defendant	Individual	Lost	Lost	Thio Ying Ying of Kelvin Chia Partnership Tan Yeow Hiang of Kelvin Chia Partnership
Chua Teck Meng	Defendant	Individual	Claim Dismissed	Dismissed	Thio Ying Ying of Kelvin Chia Partnership Tan Yeow Hiang of Kelvin Chia Partnership
Chua Tiak Seng Charlie	Defendant	Individual	Claim Dismissed	Dismissed	Thio Ying Ying of Kelvin Chia Partnership Tan Yeow Hiang of Kelvin Chia Partnership

3. Judges

Judge Name	Title	Delivered Judgment
Lai Siu Chiu	Judge	Yes

4. Counsels

Counsel Name	Organization
Davinder Singh	Cheo Yeoh & Associates LLC
Shobna Chandran	Cheo Yeoh & Associates LLC
Hri Kumar	Cheo Yeoh & Associates LLC
Johnny Cheo Chai Beng	Cheo Yeoh & Associates LLC
Anna Oei	Tan Oei & Oei LLC
Chen Wei Ling	Tan Oei & Oei LLC
Thio Ying Ying	Kelvin Chia Partnership
Tan Yeow Hiang	Kelvin Chia Partnership

4. Facts

Goh Eng Wah and Chua Joon Nam established Daikin Airconditioning (Singapore) Pte Ltd in 1968.
In 1981, Daikin Industries Ltd acquired a majority stake in Daikin Airconditioning (Singapore) Pte Ltd.
An Incentive Scheme was created to compensate local shareholders for allowing Daikin Industries to acquire the majority stake.
The Incentive Scheme allocated a percentage of net profit before tax to local directors and selected officers.
After Chua Joon Nam's death, his son Robert Chua Teck Chew took over his role in allocating payments under the Incentive Scheme.
Goh Eng Wah claimed a shortfall in payments under the Incentive Scheme from 1992 to 2001.
The Chua brothers argued that the Incentive Scheme was varied to allow for allocation based on contribution to the company.

5. Formal Citations

Goh Eng Wah v Daikin Industries Ltd and Others, Suit 742/2005, [2008] SGHC 190

6. Timeline

Date	Event
1950-01-01	Goh Eng Wah started his cinema business.
1968-01-01	Daikin Airconditioning (Singapore) Pte Ltd established as a partnership between CJN and the plaintiff.
1972-01-01	Daikin Airconditioning (Singapore) Pte Ltd appointed as sole distributor of Daikin air-conditioning units.
1972-01-01	Fourth defendant became a shareholder in Daikin Airconditioning (Singapore) Pte Ltd.
1974-09-01	Fourth defendant assumed the role of Executive Director in Daikin Airconditioning (Singapore) Pte Ltd.
1976-04-01	Daikin Industries Limited took up shares in Daikin Airconditioning (Singapore) Pte Ltd.
1979-05-01	Plaintiff injected $375,000 into Daikin Airconditioning (Singapore) Pte Ltd via Kin Wah Co (Pte) Ltd.
1980-08-01	Daikin Industries Limited provided $340,000 in exchange for shares in Daikin Airconditioning (Singapore) Pte Ltd.
1981-04-01	Sim Boon Woo bought Chong Kam Sai's shares in Daikin Airconditioning (Singapore) Pte Ltd.
1981-07-15	Memorandum for Incentive Scheme signed.
1981-01-01	Daikin Industries Limited became the majority shareholder of Daikin Airconditioning (Singapore) Pte Ltd.
1983-09-16	Letter sent to Mr. T. Morimoto of Daikin Industries Limited by the second defendant regarding the incentive scheme.
1983-10-01	Sim Boon Woo sold his shares to Chuas Investment Private Limited.
1983-11-14	Reply to letter dated 16 September 1983 was sent by Mr T. Morimoto of Daikin Industries Limited.
1987-01-01	Plaintiff resigned as Chairman of Daikin Airconditioning (Singapore) Pte Ltd and became Vice-Chairman.
1987-01-01	Plaintiff's son resigned as a director of Daikin Airconditioning (Singapore) Pte Ltd.
1989-09-17	Chua Joon Nam passed away.
1990-07-01	Fifth defendant became an executive Director of Daikin Airconditioning (Singapore) Pte Ltd.
2002-01-01	Disagreements arose between Daikin Industries Limited and the Chua brothers.
2002-01-01	Chua brothers resigned as directors.
2002-01-01	Chua brothers instituted Originating Summons No 792 of 2002 against Daikin Industries Limited and Daikin Airconditioning (Singapore) Pte Ltd.
2002-01-01	Daikin Industries Limited bought out the Chua Group’s shares in Daikin Airconditioning (Singapore) Pte Ltd for $7m.
2002-01-01	Daikin Industries Limited conducted separate negotiations with the Goh Group to purchase their shares in Daikin Airconditioning (Singapore) Pte Ltd.
2003-09-01	Inspection of records completed.
2004-01-01	Plaintiff commenced proceedings in Suit No 60 of 2004 against Daikin Industries Limited and Daikin Airconditioning (Singapore) Pte Ltd.
2005-09-16	Suit No 60 of 2004 was discontinued by the plaintiff.
2005-10-14	Present suit commenced.
2008-10-31	Judgment reserved.

7. Legal Issues

Breach of Contract
- Outcome: The court found that the third defendant breached the terms of the Incentive Scheme by unilaterally varying the payment allocation.
- Category: Substantive
- Sub-Issues:
  - Unilateral variation of contract terms
  - Failure to adhere to agreed payment scheme
Fiduciary Duty
- Outcome: The court found that no fiduciary relationship existed between the plaintiff and the third defendant in relation to the Incentive Scheme.
- Category: Substantive
- Sub-Issues:
  - Existence of fiduciary relationship between director and shareholder
  - Breach of fiduciary duty by director
Limitation of Actions
- Outcome: The court found that the limitation period was postponed due to the third defendant's reckless concealment of the plaintiff's right of action, and the plaintiff's claims were not time-barred.
- Category: Procedural
- Sub-Issues:
  - Postponement of limitation period due to fraud
  - Reasonable diligence in discovering fraud
Waiver
- Outcome: The court found that the plaintiff did not waive his rights to payment under the Incentive Scheme.
- Category: Substantive
- Sub-Issues:
  - Waiver by election
  - Waiver by estoppel
Estoppel
- Outcome: The court found that the plaintiff was not estopped from claiming any shortfall in payment under the Incentive Scheme.
- Category: Substantive
- Sub-Issues:
  - Estoppel by representation
  - Reliance on representation

8. Remedies Sought

Monetary Damages

9. Cause of Actions

Breach of Contract

10. Practice Areas

Commercial Litigation

11. Industries

Manufacturing
Air Conditioning

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd	High Court	Yes	[2008] 3 SLR 1029	Singapore	Cited for principles of contractual interpretation.
Thai Kenaf Co Ltd v Keck Seng (S) Pte Ltd	Court of Appeal	Yes	[1993] 2 SLR 92	Singapore	Cited regarding the factual matrix surrounding a contract suggesting agency.
Smith v Anderson	Court of Appeal	Yes	(1880) 15 Ch D 247	England and Wales	Cited and distinguished regarding the effect of a director's signature on a contract.
Koh Kia Hiong v Guo Enterprises Pte Ltd	High Court	Yes	[1989] SLR 1166	Singapore	Cited and distinguished regarding the capacity in which a managing-director signs a contract.
Churchward v The Queen	Queen's Bench	Yes	(1865) 1 QB 173	England and Wales	Cited and distinguished regarding implying a covenant into an existing agreement.
Bristol & West Building Society v Mothew	Court of Appeal	Yes	[1998] Ch 1	England and Wales	Cited for the definition of a fiduciary and their obligations.
SM Trading Services (a firm) v Intersanctuary Ltd	High Court	Yes	[2006] 3 SLR 397	Singapore	Cited for the definition of a fiduciary and the existence of fiduciary duty.
Hospital Products Ltd v United States Surgical Corporation	High Court	Yes	(1984) 156 CLR 41	Australia	Cited regarding the circumstances in which a fiduciary relationship will be found to exist.
Tai Kim San & Anor v Lim Cher Kia	High Court	Yes	[2001] 1 SLR 607	Singapore	Cited regarding the existence of a fiduciary duty and the obligations it entails.
Percival v Wright	High Court	Yes	[1902] 2 Ch 421	England and Wales	Cited regarding a director of a company owing duties to a single shareholder.
Coleman v Myers	Court of Appeal	Yes	[1977] 2 NZLR 225	New Zealand	Cited regarding a director of a company owing duties to a single shareholder.
Glavanics v Brunninghausen	Supreme Court	Yes	(1996) 19 ACSR 204	Australia	Cited regarding a director of a company owing duties to a single shareholder.
Cook v Evatt (No 2)	High Court	Yes	[1992] 1 NZLR 676	New Zealand	Cited regarding the existence of a power or discretion on the part of the fiduciary by which he can alter or affect the interests of another.
Susilawati v American Express Bank Ltd	Court of Appeal	Yes	[2008] 1 SLR 237	Singapore	Cited regarding the existence of a power or discretion on the part of the fiduciary by which he can alter or affect the interests of another.
Jia Min Building Construction Pte Ltd v Ann Lee Pte Ltd	High Court	Yes	[2004] 3 SLR 288	Singapore	Cited regarding the meaning of waiver.
The “Pacific Vigorous”	High Court	Yes	[2006] SGHC 103	Singapore	Cited regarding waiver by election.
Bayerische Hypo und Vereinsbank AG v C K Tang Ltd	High Court	Yes	[2004] SGHC 254	Singapore	Cited regarding waiver by election.
T2 Networks Pte Ltd v Nasioncom Sdn Bhd	Court of Appeal	Yes	[2008] 2 SLR 1	Singapore	Cited regarding waiver by estoppel.
Sanderson v Blyth Theatre	King's Bench Division	Yes	[1903] 2 KB 533	England and Wales	Cited regarding Sanderson order for costs.
King v Victor Parsons & Co	Court of Appeal	Yes	[1973] 1 WLR 29	England and Wales	Cited regarding the meaning of fraud under s 29(1) of the Limitation Act.
Bank of America National Trust and Savings Association v Herman Iskandar & Anor	Court of Appeal	Yes	[1998] 2 SLR 265	Singapore	Cited regarding the meaning of fraud under s 29(1) of the Limitation Act.
Bulli Coal Mining Co v Osborne	House of Lords	Yes	[1899] AC 351	United Kingdom	Cited regarding the meaning of fraud under s 29(1) of the Limitation Act.
Applegate v Moss	Court of Appeal	Yes	[1971] 1 QB 406	England and Wales	Cited regarding the meaning of fraud under s 29(1) of the Limitation Act.
Peco Arts Inc v Hazlitt Gallery Ltd	High Court	Yes	[1983] 1 WLR 1315	England and Wales	Cited regarding the meaning of reasonable diligence in the context of the UK Limitation Act.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Limitation Act (Cap 163, 1996 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Incentive Scheme
Net Profit Before Tax
Local Directors
Shareholders
Majority Shareholding
Variation of Contract
Fiduciary Duty
Constructive Trust
Waiver
Estoppel
Limitation Period
Fraudulent Concealment

15.2 Keywords

contract
incentive scheme
fiduciary duty
limitation
shareholder
director
singapore
breach of contract

17. Areas of Law

Area Name	Relevance Score
Breach of Contract	75
Contract Law	70
Fiduciary Duties	60
Company Law	50
Limitation	50
Corporate Law	45
Estoppel	40
Corporate Governance	30
Duty to Account	30
Equity and limitation of actions	25

16. Subjects

Contract Law
Company Law
Fiduciary Duty
Limitation of Actions