ABB v Sher Hock Guan: Director's Fiduciary Duties & Contractual Terms in Competitor Assistance

ABB Holdings Pte Ltd, ABB Installation Materials (East Asia) Pte Ltd, and ABB Industry Pte Ltd sued Sher Hock Guan Charles in the High Court of Singapore on July 6, 2009, alleging breach of express and implied fiduciary duties. The plaintiffs claimed that Sher Hock Guan Charles, while employed by ABB, assisted a competitor, Huadian, by facilitating the engagement of a technical advisor and developing business plans. The court found that Sher Hock Guan Charles breached his fiduciary duties to the second and third plaintiffs by failing to disclose XIHARI's intention to develop competing products, communicating with Mr. Leonhardt to secure his services for XIHARI and Huadian, and working on business plans for Huadian while still employed by ABB. The court dismissed the claim of the first plaintiff and ruled in favor of the second and third plaintiffs, ordering either damages to be assessed or an account of the defendant's profits.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Judgment for the second and third plaintiffs against the defendant for either damages to be assessed or an account of the defendant’s profits to be taken, at the election of the second and third plaintiffs. The claim of the first plaintiff against the defendant is dismissed.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment reserved.

1.5 Jurisdiction

Singapore

1.6 Description

ABB sues Sher Hock Guan for breaching fiduciary duties by assisting a competitor. The court examines the scope of duties and contractual terms.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
ABB Holdings Pte LtdPlaintiffCorporationClaim DismissedDismissed
Sher Hock Guan CharlesDefendantIndividualJudgment against DefendantLost
ABB Installation Materials (East Asia) Pte LtdPlaintiffCorporationJudgment for PlaintiffWon
ABB Industry Pte LtdPlaintiffCorporationJudgment for PlaintiffWon

3. Judges

Judge NameTitleDelivered Judgment
Judith PrakashJudgeYes

4. Counsels

Counsel NameOrganization
Jiang Ke-YueLee & Lee
Tan Tee JimLee & Lee
Julian TayLee & Lee
Deborah BarkerKhattarWong
Ang Keng LingKhattarWong

4. Facts

  1. Sher Hock Guan Charles worked for ABB Group from 1990 to February 2003.
  2. From 1997, Sher Hock Guan Charles held senior positions in ABB Singapore Group.
  3. Sher Hock Guan Charles joined Huadian as General Manager in March 2003.
  4. Huadian manufactures switchgears and circuit breakers, competing with ABB.
  5. Sher Hock Guan Charles corresponded with Guenther Leonhardt regarding XIHARI's interest in a technical advisor.
  6. Sher Hock Guan Charles did not disclose his involvement with Huadian to ABB.
  7. Sher Hock Guan Charles was involved in the incorporation of Great Vision and Webmoney.

5. Formal Citations

  1. ABB Holdings Pte Ltd and Others v Sher Hock Guan Charles, Suit 798/2007, [2009] SGHC 157

6. Timeline

DateEvent
Sher Hock Guan Charles began working for various companies in the ABB Group.
First employment contract between ABB Holdings Pte Ltd and Sher Hock Guan Charles.
Sher Hock Guan Charles became President of ABB Installation Materials (East Asia) Pte Ltd.
Sher Hock Guan Charles became Director of ABB Installation Materials (East Asia) Pte Ltd.
Second employment contract between ABB Holdings Pte Ltd and Sher Hock Guan Charles.
Effective date of the second employment contract.
Sher Hock Guan Charles became General Manager of ABB Industry Pte Ltd.
Third employment contract letter from ABB Industry Pte Ltd to Sher Hock Guan Charles.
Sher Hock Guan Charles became Vice-President and Head of Business Area Low Voltage Products, Automation Technology Products Division Asia South, ABB Industry Pte Ltd.
Great Vision International Pte Ltd incorporated.
Webmoney Investment (s) Pte Ltd incorporated.
Huadian incorporated.
Sher Hock Guan Charles left ABB Group.
Sher Hock Guan Charles joined Huadian as General Manager.
Gelpag International Pte Ltd incorporated.
Sher Hock Guan Charles became Managing Director of Huadian.
Plaintiffs commenced action.
Judgment reserved.

7. Legal Issues

  1. Breach of Fiduciary Duty
    • Outcome: The court found that the defendant breached his fiduciary duty by failing to disclose XIHARI's intention to develop competing products and by assisting XIHARI in securing a technical advisor.
    • Category: Substantive
    • Sub-Issues:
      • Failure to disclose potential threat to business
      • Conflict of interest
      • Assisting a competitor
  2. Breach of Contract
    • Outcome: The court found that the defendant breached his contractual duty of fidelity by working on plans to develop and run the business of Huadian while still employed by ABB.
    • Category: Substantive
    • Sub-Issues:
      • Violation of express terms
      • Violation of implied terms
      • Private participation in other business activities
  3. Scope of Fiduciary Duties
    • Outcome: The court determined that the defendant, as a senior employee, owed fiduciary duties to the second and third plaintiffs.
    • Category: Substantive
    • Sub-Issues:
      • Duties of senior management
      • Duties of directors

8. Remedies Sought

  1. Damages
  2. Account of Profits

9. Cause of Actions

  • Breach of Contract
  • Breach of Fiduciary Duty

10. Practice Areas

  • Commercial Litigation
  • Corporate Law

11. Industries

  • Manufacturing
  • Electrical Engineering

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Intergraph Systems South East Asia Pte Ltd v Zhang YiguangSingapore Court of AppealYes[2004] SGCA 52SingaporeCited for the principle of ascertaining contractual intention of parties when incorporating terms and conditions found in an external document.
Alexander v Standard Telephones & Cables Ltd (No 2)N/AYes[1991] IRLR 286N/ACited for the principles to be applied in determining whether a part of a collective agreement is incorporated into individual contracts of employment.
Shepherds Investment Ltd v WaltersEnglish High CourtYes[2006] EWHC 836England and WalesCited to support the proposition that a senior employee can owe the same fiduciary duties to his employer as a director of that employer would.
Canadian Aero Service Ltd v O’MalleyN/AYes(1973) 40 DLR (3d) 371CanadaCited to support the proposition that senior management officials have a duty of loyalty, good faith, and avoidance of a conflict of duty and self-interest.
British Midland Tool v Midland InternationalN/AYes[2003] EWHC 466N/ACited for the principle that a director's duty includes informing the company of any activity, actual or threatened, which damages those interests.
IDC Ltd v CooleyN/AYes[1972] 1 WLR 443N/ACited for the principle that information which goes to the defendant while he was managing director of the plaintiff company and which was of concern to the plaintiffs and was relevant for the plaintiff to know, was information which it was the defendant’s duty to pass on to the plaintiff because between himself and the plaintiff, a fiduciary relationship existed.
Hivac Limited v Park Royal Scientific Instruments LimitedN/AYes[1946] Ch 169N/ACited for the scope of duty of fidelity of employees included not “knowingly, deliberately and secretly [setting] themselves to do in his spare time something which would inflict great harm on their employer’s business”

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • Fiduciary Duty
  • Contractual Terms
  • Conflict of Interest
  • Confidential Information
  • Medium Voltage Products
  • Low Voltage Products
  • Employee Handbook
  • Huadian
  • XIHARI
  • General Terms and Conditions of Employment

15.2 Keywords

  • fiduciary duty
  • breach of contract
  • director duties
  • contractual terms
  • ABB
  • Sher Hock Guan Charles
  • Huadian
  • Singapore
  • High Court

17. Areas of Law

Area NameRelevance Score
Fiduciary Duties90
Director's Duties85
Breach of Duty75
Corporate Law70
Contractual terms65
Contract Law60
Business Law50
Employment Law40

16. Subjects

  • Fiduciary Duty
  • Contract Law
  • Employment Law
  • Corporate Governance