Baldor Electric v Liew Chin Choy: Breach of Fiduciary Duty & Conspiracy
In Baldor Electric (Asia) Pte Ltd v Liew Chin Choy and others, the High Court of Singapore heard a claim by Baldor Electric against Liew Chin Choy, its former Sales Manager, for breach of fiduciary duties, against Liew's wife, Neo Bee Hong, as constructive trustee, and against WEG Export Adora S.A. for inducing the breach and conspiracy to defraud. Liew counterclaimed for loss of employment. The court found Liew liable for breach of duty of fidelity and good faith, dismissed the claims against Neo and WEG, and dismissed Liew's counterclaim.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Judgment for Plaintiff against the first defendant, Liew Chin Choy. Claims against the second and third defendants dismissed. Counterclaim dismissed.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Baldor Electric sued Liew Chin Choy for breach of fiduciary duty. The court found Liew liable for breach of duty of fidelity.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Baldor Electric (Asia) Pte Ltd | Plaintiff | Corporation | Judgment for Plaintiff | Won | |
| Liew Chin Choy | Defendant | Individual | Claim Dismissed | Lost | |
| Neo Bee Hong | Defendant | Individual | Claim Dismissed | Dismissed | |
| WEG Export Adora S.A. | Defendant | Corporation | Claim Dismissed | Dismissed |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Tay Yong Kwang | Judge | Yes |
4. Counsels
4. Facts
- Liew was employed by Baldor as Sales Manager responsible for sales and marketing in Singapore, Malaysia, Indonesia, Brunei, Thailand and Vietnam.
- Liew became the second bank signatory for PT Kenvin’s bank account before it was incorporated.
- Liew issued letters certifying that PT Kenvin was Baldor’s authorised distributor/agent in Indonesia without approval from Baldor.
- Neo, Liew’s wife, received USD15,000 and USD5,000 from PT Kenvin into her USD account.
- Liew received USD9,000 from PT Sarana and S$2,450 from CV Surya, customers of PT Kenvin.
- Liew resigned from Baldor and commenced employment with WEG as Managing Director of WEG Singapore Pte Ltd.
- Liew sent four sales enquiries he received in his capacity as employee of Baldor to WEG.
5. Formal Citations
- Baldor Electric (Asia) Pte Ltd v Liew Chin Choy and others, Suit No 439 of 2006, [2010] SGHC 32
6. Timeline
| Date | Event |
|---|---|
| Liew was employed by Baldor as its Assistant Sales Manager. | |
| Liew was promoted to Sales Manager of Baldor. | |
| PT Kenvin Elektrika Makmur was incorporated in Indonesia. | |
| Liew issued a letter under Baldor’s letterhead certifying that PT Kenvin was Baldor’s authorised distributor/agent in Indonesia. | |
| Neo opened a DBS Bank US Dollar Account. | |
| Neo received USD15,000 from PT Kenvin into her USD account. | |
| Liew issued a letter under Baldor’s letterhead certifying that PT Kenvin was Baldor’s authorised distributor/agent in Indonesia. | |
| Neo received USD5,000 from PT Kenvin into her USD account. | |
| Liew initiated contact via email with WEG. | |
| Wolf spoke to Liew regarding Liew’s proposal to assist WEG in opening a branch office in Singapore. | |
| Liew met Schwartz in Nantong City, China. | |
| Liew received USD9,000 from PT Sarana. | |
| Liew met several of the directors and managers of WEG in Brazil. | |
| Liew received S$2,450 from CV Surya. | |
| Liew sent four sales enquiries he received in his capacity as employee of Baldor to Wolf. | |
| Liew sent four sales enquiries he received in his capacity as employee of Baldor to Wolf. | |
| WEG sent the finalised employment contract to Liew. | |
| Liew resigned and left Baldor’s employment. | |
| Liew commenced employment with WEG as Managing Director of WEG Singapore Pte Ltd. | |
| WEG Singapore Pte Ltd was registered in Singapore. | |
| Mdm Hajjah Widyantari Darwin sent a letter to Baldor. | |
| Baldor’s solicitors sent a letter of demand to Liew. | |
| Liew replied agreeing to pay the USD29,000 in three instalments. | |
| Liew confirmed he did not receive any monies from any other organisation/companies in the territories nor monies from PT. Kenvin. | |
| Baldor’s solicitors wrote to Liew stating that in reliance on his express representation that apart from USD29,000, he did not receive any other sums from PT Kenvin, its customers or any other organisation in breach of his duties to Baldor, Baldor accepted his instalment plan. | |
| Liew paid Baldor a total of USD29,000 in three instalments. | |
| Liew paid Baldor a total of USD29,000 in three instalments. | |
| Tan discovered that Liew had joined WEG. | |
| Liew paid Baldor a total of USD29,000 in three instalments. | |
| Tan discovered that Liew had received a payment of S$2,450 from another of PT Kenvin’s customers CV Surya. | |
| TecBiz FRisMan Pte Ltd was engaged by Baldor to retrieve email messages from a Fujitsu laptop computer. | |
| WEG terminated Liew’s employment contract. | |
| Liew started a new company, Motor Technology Asia and was appointed as WEG’s agent in Singapore. | |
| Decision Date |
7. Legal Issues
- Breach of Fiduciary Duty
- Outcome: The court found that Liew, as Sales Manager, was not a fiduciary but breached his duty of fidelity and good faith to Baldor.
- Category: Substantive
- Sub-Issues:
- Conflict of interest
- Secret profits
- Diversion of corporate opportunities
- Related Cases:
- [2000] ICR 1462
- [2007] 3 SLR 265
- [1984] 156 CLR
- (1973) 40 DLR (3d) 371
- [2002] BCCA 532
- Breach of Duty of Fidelity and Good Faith
- Outcome: The court found that Liew breached his duty of fidelity and good faith to Baldor by acquiring an interest in PT Kenvin, purporting to appoint PT Kenvin as Baldor’s distributor without approval, his conduct of Baldor’s relationship with PT Kenvin, and his receipt of Secret Payments from PT Kenvin or other entities in Indonesia.
- Category: Substantive
- Related Cases:
- [2008] 1 SLR 663
- [2004] 1 SLR 234
- [2004] 3 SLR 73
- Constructive Trust
- Outcome: The court found that Neo was not liable as constructive trustee of the receipt of the secret payments from PT Kenvin.
- Category: Substantive
- Sub-Issues:
- Knowing receipt of secret profits
- Related Cases:
- [1995] 3 WLR 64
- [2002] 3 SLR 241
- Conspiracy to Defraud
- Outcome: The court found that Baldor failed to prove its case on the ground of conspiracy to defraud.
- Category: Substantive
- Sub-Issues:
- Unlawful means
- Related Cases:
- [2006] SGHC 152
- [2009] SGHC 157
- Inducement of Breach of Duty
- Outcome: The court found that Baldor has not adduced any evidence to prove that WEG induced Liew to breach his duties to Baldor.
- Category: Substantive
- Confidentiality of Information
- Outcome: The court found that Baldor has failed to establish that the Baldor Information was in fact divulged to WEG or that there would be a risk that such information, assuming it was confidential, would be divulged.
- Category: Substantive
- Related Cases:
- [2003] 4 SLR 658
8. Remedies Sought
- Monetary Damages
- Account of Profits
- Declaration of Constructive Trust
9. Cause of Actions
- Breach of Fiduciary Duty
- Breach of Duty of Fidelity and Good Faith
- Inducement of Breach of Duty
- Conspiracy to Defraud
- Constructive Trust
10. Practice Areas
- Commercial Litigation
11. Industries
- Manufacturing
- Electrical Engineering
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Nottingham University v Fishel and another | N/A | Yes | [2000] ICR 1462 | N/A | Cited for the principle that the essence of the employment relationship is not typically fiduciary. |
| Nagase Singapore Pte Ltd v Ching Kai Huat and Ors | High Court | Yes | [2007] 3 SLR 265 | Singapore | Cited for the principle that the essence of the employment relationship is not typically fiduciary. |
| Hospital Products Ltd v United States Surgical Corporation | High Court of Australia | Yes | [1984] 156 CLR | Australia | Cited for the principle that contractual and fiduciary relationships may coexist between the same parties. |
| Canadian Aero Service Ltd v O’Malley | N/A | Yes | (1973) 40 DLR (3d) 371 | N/A | Cited to argue that Liew was in a fiduciary relationship with Baldor, but distinguished because Liew was only a Sales Manager. |
| Mitchell v Paxton Forest Products Inc | N/A | Yes | [2002] BCCA 532 | N/A | Cited as a factually similar case where the plaintiff was employed as a mill manager and later promoted to a sales manager. |
| Man Financial (S) Pte Ltd (formerly known as E D & F Man International (S) Pte Ltd) v Wong Bark Chuan David | Court of Appeal | Yes | [2008] 1 SLR 663 | Singapore | Cited for the principle that there is an implied term in the employer’s favour that the employee will serve the employer with good faith and fidelity. |
| Asiawerks Global Investment Group Pte Ltd v Ismail bin Syed Ahmad | N/A | Yes | [2004] 1 SLR 234 | Singapore | Cited for the principle that all employees are expected to serve their employers diligently, honestly and loyally. |
| Pacific Autocom Enterprise Pte Ltd v Chia Wah Siang | N/A | Yes | [2004] 3 SLR 73 | Singapore | Cited for the principle that the defendant was in breach of his duty of good faith and fidelity to the plaintiff as he played an active part in the breakdown of the relationship between the plaintiff and Blaser. |
| Asia Business Forum Pte Ltd v Long Ai Sin and Anor | N/A | Yes | [2003] 4 SLR 658 | Singapore | Cited for the principle that after an employee had left the employment of his employer, he could not use materials which were, in all the circumstances, of such a highly confidential nature as to require the same protection as a trade secret. |
| Royal Brunei Airlines Sdn Bhd v Philip Tan Kok Ming | N/A | Yes | [1995] 3 WLR 64 | N/A | Cited for the principle that knowledge is inferred from the evidence adduced. |
| Caltong (Australia) Pty Ltd v Tong Tien See Construction Pte Ltd (in liquidation) and another appeal | N/A | Yes | [2002] 3 SLR 241 | Singapore | Cited for the principle that knowledge is inferred from the evidence adduced. |
| Wu Yang Construction Group Ltd v Zhejian Jinyi Group Co., Ltd and Ors | High Court | Yes | [2006] SGHC 152 | Singapore | Cited for the principle that an allegation of fraud and/or conspiracy was an extremely serious one and entailed a high requirement with respect to proof. |
| ABB Holdings Pte Ltd and Others v Sher Hock Guan Charles | High Court | Yes | [2009] SGHC 157 | Singapore | Cited to show that Liew had not gone to the extent the defendant did in ABB Holdings Pte Ltd and Others v Sher Hock Guan Charles. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| No applicable statutes | |
15. Key Terms and Keywords
15.1 Key Terms
- Fiduciary Duty
- Duty of Fidelity
- Secret Profits
- Corporate Opportunities
- Constructive Trust
- Sales Manager
- Authorised Distributor
- Sales Enquiries
15.2 Keywords
- Fiduciary Duty
- Breach of Duty
- Sales Manager
- Singapore
- High Court
- Employment Law
- Commercial Litigation
17. Areas of Law
16. Subjects
- Employment Law
- Fiduciary Duty
- Commercial Litigation