Wong Leong Wei Edward v Acclaim Insurance: Commission Dispute & Mass Resignation
In Wong Leong Wei Edward and another v Acclaim Insurance Brokers Pte Ltd and another, the High Court of Singapore addressed a dispute between Wong Leong Wei Edward, former head of Acclaim Insurance's strategic wealth management division, and Acclaim Insurance over unpaid commissions and losses from mass resignations. The plaintiffs claimed commissions and remuneration, while the defendant counterclaimed for losses due to the resignations and client transfers to Leadenhall Insurance Brokers Pte Ltd. The court found that the financial advisors backdated their resignation letters and that Edward engaged in cash-back arrangements with clients, justifying his termination. The court awarded judgment in favour of the plaintiffs in part and dismissed the plaintiff's claim in Suit 106.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Judgment for Plaintiffs in part; Defendant's counterclaim partially succeeds; Plaintiff's claim in Suit 106 dismissed.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Insurance broker Acclaim Insurance sued by former head of strategic wealth management division for unpaid commissions. Court addresses mass resignations and propriety of client transfers.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Wong Leong Wei Edward | Plaintiff | Individual | Judgment for Plaintiff in part | Partial | |
| Acclaim Insurance Brokers Pte Ltd | Defendant | Corporation | Counterclaim Partially Succeeds | Partial | |
| Stralos | Plaintiff | Corporation | Judgment for Plaintiff | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Steven Chong | Judge | Yes |
4. Counsels
4. Facts
- Edward was the head of the defendant's strategic wealth management division.
- Edward and the defendant agreed to set up a SWM division under the defendant.
- Stralos was incorporated by Edward to handle administrative matters for the SWM division.
- FARs assigned their right to receive remuneration to Stralos.
- Edward organized a staff-incentive trip to Thailand.
- After the Thailand trip, 26 FARs joined Leadenhall and transferred clients.
- The defendant withheld commissions and earnings due to Edward and the FARs.
- Edward was terminated for allegedly providing cash-backs to clients.
- FARs backdated their letters of resignation.
- Edward instructed the FARs to transfer their clients over to Leadenhall.
5. Formal Citations
- Wong Leong Wei Edward and another v Acclaim Insurance Brokers Pte Ltd and another, Suit No 781 of 2007 & Suit No 106 of 2009, [2010] SGHC 352
6. Timeline
| Date | Event |
|---|---|
| Edward and Anthony Lim agreed to set up a SWM division under the defendant. | |
| Stralos incorporated by Edward. | |
| Edward joined the defendant as a Financial Adviser Manager and was appointed head of the SWM division. | |
| Between August 2006 and July 2007, over 20 individuals joined the defendant’s SWM division as FARs. | |
| Staff-incentive cum team-building trip for the SWM division to Thailand. | |
| SWM division in Leadenhall was formed. | |
| New Leadenhall FA codes for the FARs were created on 22 and 23 July 2007. | |
| Edward was terminated from his position with the defendant. | |
| Defendant lodged reports with the police and the Corrupt Practices Investigations Bureau. | |
| The undesirable features of this practice came to the attention of the Monetary Authority of Singapore (“MAS”). | |
| Complete shutdown of the financial advisory business of three insurance broking companies. | |
| Edward commenced a separate and rather belated action against the defendant in Suit No 106 of 2009 (“Suit 106”) for wrongful termination. | |
| Edward had already obtained summary judgment on 4 June 2008 against the defendant for the sum of $59,892.13, which was due personally to him. | |
| Decision Date |
7. Legal Issues
- Breach of Contract
- Outcome: The court found that the FARs breached their contracts by backdating their resignation letters and failing to provide the required 30-day notice.
- Category: Substantive
- Sub-Issues:
- Failure to provide proper notice of resignation
- Backdating of resignation letters
- Wrongful Termination
- Outcome: The court found that Edward's termination was justified due to his involvement in cash-back payments and breach of his duty of good faith and fidelity.
- Category: Substantive
- Sub-Issues:
- Misconduct
- Breach of duty of good faith and fidelity
- Breach of Fiduciary Duty
- Outcome: The court found that Edward breached his duty of good faith and fidelity by instigating the mass exodus of FARs and instructing them to transfer clients to Leadenhall while still employed by the defendant.
- Category: Substantive
- Sub-Issues:
- Instigating mass resignation
- Instructing transfer of clients
- Equitable Set-Off
- Outcome: The court allowed the defendant to set off its claim for damages against the commissions and earnings due to Edward and the FARs.
- Category: Procedural
- Burden of Proof
- Outcome: The court held that the burden of proving the exact date of resignation lay with the plaintiffs, as it was a fact especially within their knowledge.
- Category: Procedural
8. Remedies Sought
- Outstanding Commissions and Earnings
- Damages for Breach of Contract
- Damages for Wrongful Termination
9. Cause of Actions
- Breach of Contract
- Breach of Fiduciary Duty
- Wrongful Termination
10. Practice Areas
- Commercial Litigation
- Employment Litigation
- Insurance Litigation
- Financial Services Litigation
11. Industries
- Insurance
- Financial Services
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Surender Singh s/o Jagdish Singh and another (administrators of the estate of Narindar Kaur d/o Sarwan Singh, deceased) v Li Man Kay and others | High Court | Yes | [2010] 1 SLR 428 | Singapore | Cited for the application of section 108 of the Evidence Act regarding the burden of proving facts especially within one's knowledge. |
| Aldabe Fermin v Standard Chartered Bank | High Court | Yes | [2010] 3 SLR 722 | Singapore | Cited for the principle that a party can justify contract termination on grounds other than those initially furnished. |
| Rickshaw Investments Ltd and another v Nicolai Baron von Uexkull | High Court | Yes | [2007] 1 SLR(R) 377 | Singapore | Cited for the principle that an employee owes his or her employer a duty of good faith and fidelity. |
| Man Financial (S) Pte Ltd v Wong Bark Chuan David | High Court | Yes | [2008] 1 SLR(R) 663 | Singapore | Cited for the principle that an employee owes his or her employer a duty of good faith and fidelity. |
| Asiawerks Global Investment Group Pte Ltd v Ismail bin Syed Ahmad and another | High Court | Yes | [2004] 1 SLR(R) 234 | Singapore | Cited for examples of how the duty of good faith and fidelity translates into practice in employment relationships. |
| Malik and Mahmud v Bank of Credit and Commerce International SA (In Compulsory Liquidation) | House of Lords | Yes | [1998] 1 AC 20 | United Kingdom | Cited for the principle that damages can be recovered for financial loss where breach of contract damages one's reputation, causing foreseeable financial loss. |
| Arul Chandran v Gartshore and others | High Court | Yes | [2000] 1 SLR(R) 436 | Singapore | Cited for its summary of the principles established in Malik v BCCI regarding damages for breach of the implied term of trust and confidence in employment contracts. |
| Amixco Asia (Pte) Ltd v Bank Bumiputra Malaysia Bhd | High Court | Yes | [1992] 2 SLR(R) 65 | Singapore | Cited for exceptions to the rule that a party can justify contract termination on grounds other than those initially furnished. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Financial Advisers Act (Cap 110, 2007 Rev Ed) | Singapore |
| Financial Advisers Act s 12 | Singapore |
| Evidence Act (Cap 97, 1997 Rev Ed) | Singapore |
| Evidence Act s 108 | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Strategic Wealth Management
- Financial Adviser Representatives
- Financial Adviser Codes
- Cash-Back Arrangement
- Mass Resignation
- Transfer Forms
- Equitable Set-Off
- Backdating
- Financial Adviser Manager
15.2 Keywords
- insurance broker
- commissions
- financial advisors
- mass resignation
- cash back
- fiduciary duty
- wrongful termination
17. Areas of Law
16. Subjects
- Contract Dispute
- Employment Dispute
- Insurance Broking
- Financial Advisory Services