Swiss Butchery Pte Ltd v Huber Ernst: Breach of Director's Duties and Conspiracy
In Swiss Butchery Pte Ltd v Huber Ernst and others, the High Court of Singapore heard a case brought by Swiss Butchery Pte Ltd (SB) against Huber Ernst, a former director, and others, alleging breach of director's duties, conspiracy, and dishonest assistance. SB claimed that Huber Ernst diverted SB's wholesale and production operations to Huber's Pte Ltd (HPL) for his and his children's benefit. The court found Huber Ernst and his sons liable for breach of fiduciary duties and conspiracy to injure SB by diverting its wholesale and production operations to HPL. Judgment was granted against Huber Ernst and other defendants for damages to be assessed or an account of profits.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Judgment against the first to fifth defendants for damages to be assessed or an account for profits.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Swiss Butchery sues Huber Ernst for breach of director's duties and conspiracy, alleging diversion of business to Huber's Pte Ltd. The court found Huber Ernst liable.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Swiss Butchery Pte Ltd | Plaintiff | Corporation | Judgment for Plaintiff | Won | |
| Huber Ernst | Defendant | Individual | Judgment against Defendant | Lost | |
| Huber Ryan Ernst | Defendant | Individual | Judgment against Defendant | Lost | |
| Huber Andre Rudolf | Defendant | Individual | Judgment against Defendant | Lost | |
| Huber’s Butchery | Defendant | Other | Judgment against Defendant | Lost | |
| Thomas Norbert Kreissl | Defendant | Individual | No order on the claim | Neutral | |
| Huber's Private Limited | Defendant | Corporation | Judgment against Defendant | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Woo Bih Li | Judge | Yes |
4. Counsels
4. Facts
- Swiss Butchery (SB) was in the business of retail and wholesale butchery and production operations.
- Huber Ernst (Ernst) was the Managing Director of SB from 1994 to 2008.
- Ryan was appointed as SB’s Deputy Managing Director from 26 April 2005 to 30 September 2006.
- HPL was incorporated by Ryan on 17 September 2005.
- Ernst proposed a Share Issue Proposal to give Ryan a majority shareholding in SB, which was rejected.
- Ernst made a Share Purchase Proposal to buy out the other shareholders, which was also rejected.
- SB ceased its wholesale and production operations in March 2007, which were taken over by HPL.
5. Formal Citations
- Swiss Butchery Pte Ltd v Huber Ernst and others and another suit, Suit No 245 of 2008/V consolidated with Suit No 222 of 2008/W, [2010] SGHC 129
6. Timeline
| Date | Event |
|---|---|
| Swiss Butchery Pte Ltd incorporated | |
| Don Foo resigned as a director | |
| Don Foo transferred his shares in SB to his wife | |
| Ryan appointed as SB’s Deputy Managing Director | |
| Ernst proposed Share Issue Proposal at Polo Club meeting | |
| Share Issue Proposal rejected | |
| Ernst made Share Purchase Proposal | |
| Share Purchase Proposal rejected | |
| Wang resigned as a director of SB | |
| Huber’s Private Limited incorporated | |
| Andre returned to Singapore from Australia | |
| Ernst, Ryan and Andre viewed properties for a factory outlet | |
| Andre appointed as SB’s Sales and Marketing Executive | |
| Andre joined HPL as Sales Director | |
| Ryan paid deposit for option to purchase the Property | |
| Ernst exercised the option to purchase the Property | |
| Ryan left SB | |
| Andre left SB | |
| Ernst, Ryan and Andre met with NTUC Fairprice representatives | |
| Andre sent email to potential wholesale customers | |
| Andre corresponded with OBE Organic | |
| Andre corresponded with magazine Wine & Dine | |
| SB divested wholesale and production operations to HPL | |
| SB terminated existing cold room rental at AIS Building | |
| SB sublet cold room facilities from HPL | |
| Business Times article on HPL published | |
| Alex and Don Foo sent letter to Ernst | |
| Swiss Association of Singapore had a tour at the Property | |
| Ernst's employment as Managing Director terminated | |
| Ernst and Ernst’s wife removed as SB directors | |
| Ernst commenced Suit No. 222 | |
| SB commenced Suit No. 245 | |
| Suits consolidated by Order of Court | |
| Judgment reserved |
7. Legal Issues
- Breach of Director's Duties
- Outcome: The court found that Huber Ernst breached his fiduciary duties to Swiss Butchery by diverting business opportunities and operations to Huber's Pte Ltd.
- Category: Substantive
- Sub-Issues:
- Conflict of interest
- Failure to act in good faith
- Usurping business opportunities
- Tort of Conspiracy
- Outcome: The court found that Huber Ernst, Ryan, and Andre engaged in a conspiracy to injure Swiss Butchery by diverting its wholesale and production operations to Huber's Pte Ltd.
- Category: Substantive
- Sub-Issues:
- Conspiracy by unlawful means
- Agreement to injure
- Unlawful acts
- Tort of Dishonest Assistance
- Outcome: The court found that Thomas acted dishonestly by supplying free meat samplers to Andre and purchasing inferior quality meat products from HPL.
- Category: Substantive
- Sub-Issues:
- Breach of trust
- Knowledge of breach
- Assistance in breach
8. Remedies Sought
- Damages
- Account of Profits
9. Cause of Actions
- Breach of Fiduciary Duty
- Conspiracy
- Dishonest Assistance
10. Practice Areas
- Commercial Litigation
- Corporate Governance
11. Industries
- Food and Beverage
- Butchery
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Intraco Ltd v Multi-Pak Singapore Pte Ltd | Court of Appeal | Yes | [1994] 3 SLR(R) 1064 | Singapore | Accepted the principle that courts will not interfere with management decisions exercised in a bona fide manner. |
| Regal Hastings Ltd v Gulliver | House of Lords | Yes | [1967] 2 AC 134 | England and Wales | Cited for the principle that a fiduciary is liable to account for profits made by virtue of their position, regardless of fraud or bona fides. |
| Phipps v Boardman | N/A | No | [1966] 3 WLR 1009 | N/A | Cited for the principle that a person in a fiduciary capacity must not make a profit out of his trust. |
| Industrial Development Consultants Ltd v Cooley | N/A | Yes | [1972] 1 WLR 443 | N/A | Cited for the principle that a managing director is liable for breach of fiduciary duties if they use information obtained as managing director for personal profit. |
| CMS Dolphin Ltd v Simonet and another | N/A | Yes | [2001] 2 BCLC 704 | N/A | Cited for the principle that a director who exploits a maturing business opportunity of the company after resignation is liable for breach of fiduciary duties. |
| Quah Kay Tee v Ong & Co Pte Ltd | Court of Appeal | Yes | [1996] 3 SLR(R) 637 | Singapore | Cited for the definition of the tort of conspiracy, including conspiracy by unlawful means and conspiracy by lawful means. |
| Nagase Singapore Pte Ltd v Ching Kai Huat | N/A | Yes | [2008] 1 SLR(R) 80 | Singapore | Cited for the elements that must be satisfied to prove both forms of conspiracy. |
| Lim Leong Huat v Chip Hup Hup Kee Construction Pte Ltd | N/A | No | [2009] 2 SLR(R) 318 | Singapore | Cited for the principle that intention to cause injury is relevant to conspiracy by unlawful means. |
| Kuwait Oil Tanker Co SAK v Al Bader | N/A | Yes | [2000] 2 All ER (Comm) 271 | N/A | Cited in Lim Leong Huat v Chip Hup Hup Kee Construction Pte Ltd for the principle that it is still necessary to establish an intention or purpose to injure, but such intention or purpose need not be predominant. |
| Beckkett Pte Ltd v Deutsche Bank AG and another and another appeal | Court of Appeal | Yes | [2009] 3 SLR(R) 452 | Singapore | Cited for the definition of "unlawful means" in the context of conspiracy. |
| Revenue and Customs Commissioners v Total Network SL | House of Lords | Yes | [2008] 1 AC 1174 | England and Wales | Cited in Beckkett Pte Ltd v Deutsche Bank AG and another and another appeal for the principle that unlawful means include both crimes and torts. |
| Seagate Technology Pte Ltd and anor v Goh Han Kim | N/A | Yes | [1993] 3 SLR(R) 836 | Singapore | Cited for the principle that a high degree of proof is needed to discharge the burden of proving an allegation of conspiracy by unlawful means. |
| Wu Yang Construction Group Ltd v Zhejiang Jinyi Group Co, Ltd | N/A | Yes | [2006] 4 SLR(R) 451 | Singapore | Cited for the principle that the amount of proof required in a conspiracy claim is higher than that required in a normal civil action. |
| George Raymond Zage III and another v Ho Chi Kwong and anor | Court of Appeal | Yes | [2010] SGCA 4 | Singapore | Cited for the elements of a claim in dishonest assistance and the objective test of honesty. |
| Barlow Clowes International Ltd (in liquidation) v Eurotrust International Ltd | N/A | Yes | [2006] 1 All ER 377 | N/A | Cited in George Raymond Zage III and another v Ho Chi Kwong and anor for affirming the objective test of honesty in dishonest assistance claims. |
| Royal Brunei Airlines Sdn Bhd v Philip Tan Kok Ming | N/A | Yes | [1995] 2 AC 378 | N/A | Cited in George Raymond Zage III and another v Ho Chi Kwong and anor for the objective test of honesty in dishonest assistance claims. |
| Twinsectra Ltd v Yardley | N/A | No | [2002] 2 All ER 377 | N/A | Cited in George Raymond Zage III and another v Ho Chi Kwong and anor as a case that did not depart from the objective test of honesty. |
| Eng Gee Seng v Quek Choon Teck and Ors | N/A | No | [2010] 1 SLR 241 | Singapore | Cited for the principle that inactivity or silence can amount to ratification, but found to be inapplicable in the present circumstances. |
| Cook v Deeks | N/A | Yes | [1916] AC 554 | N/A | Cited for the principle that where directors wrongfully divert business to another company, the latter is liable to account for profits to the first company. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| Section 157 of the Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| Evidence Act (Cap 97, 1997 Rev Ed) | Singapore |
| section 116(g) of the Evidence Act (Cap 97, 1997 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Director's duties
- Fiduciary duty
- Conspiracy
- Dishonest assistance
- Divestment
- Wholesale operations
- Production operations
- Share Issue Proposal
- Share Purchase Proposal
- Huber's Private Limited
- Swiss Butchery Pte Ltd
15.2 Keywords
- Swiss Butchery
- Huber Ernst
- Director's duties
- Conspiracy
- Singapore
- Companies Act
- Fiduciary duty
- Huber's Pte Ltd
17. Areas of Law
16. Subjects
- Company Law
- Breach of Fiduciary Duty
- Conspiracy
- Commercial Litigation