Mano Vikrant Singh v Cargill: Restraint of Trade & Forfeiture of Employee Benefits

In Mano Vikrant Singh v Cargill TSF Asia Pte Ltd, the Singapore Court of Appeal, with Justices Chao Hick Tin, Andrew Phang Boon Leong, and Andrew Ang, allowed Mano Vikrant Singh's appeal. The court determined that a forfeiture provision in Cargill's incentive award plan, which forfeited deferred incentive awards if an employee competed with Cargill within two years of leaving, was an unenforceable restraint of trade. The court found that the deferred incentive award had already vested in Singh, and the forfeiture provision restrained him from joining a competitor. The court disagreed with the lower court's decision, which had upheld the forfeiture provision based on the American Employee Choice Doctrine.

1. Case Overview

1.1 Court

Court of Appeal

1.2 Outcome

Appeal Allowed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

The Court of Appeal held that a clause forfeiting employee benefits for post-employment competition is a restraint of trade, allowing the appeal.

1.7 Decision Date

6 August 2012

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Mano Vikrant Singh	Appellant	Individual	Appeal Allowed	Won	Philip Jeyaretnam, Mark Seah, Germaine Tan
Cargill TSF Asia Pte Ltd	Respondent	Corporation	Appeal Dismissed	Lost	Blossom Hing, Kimberley Leng, Mohan Gopalan, Justin Kwek

3. Judges

Judge Name	Title	Delivered Judgment
Chao Hick Tin	Justice of the Court of Appeal	No
Andrew Phang Boon Leong	Justice of the Court of Appeal	Yes
Andrew Ang	Judge	No

4. Counsels

Counsel Name	Organization
Philip Jeyaretnam	Rodyk & Davidson LLP
Mark Seah	Rodyk & Davidson LLP
Germaine Tan	Rodyk & Davidson LLP
Blossom Hing	Drew & Napier LLC
Kimberley Leng	Drew & Napier LLC
Mohan Gopalan	Drew & Napier LLC
Justin Kwek	Drew & Napier LLC

4. Facts

Mano Vikrant Singh was employed by Cargill TSF Asia Pte Ltd.
Singh's employment contract included a non-compete agreement.
Singh was granted incentive awards, part of which were deferred.
The terms and conditions of the incentive award included a forfeiture provision.
The forfeiture provision stipulated that deferred incentives would be forfeited if the employee competed with the company within two years of leaving.
Singh resigned from Cargill and started a competing business.
Cargill sought to enforce the forfeiture provision, withholding Singh's deferred incentive awards.

5. Formal Citations

Mano Vikrant Singh v Cargill TSF Asia Pte Ltd, Civil Appeal No 149 of 2011, [2012] SGCA 42
Mano Vikrant Singh v Cargill TSF Asia Pte Ltd, , [2012] 1 SLR 311

6. Timeline

Date	Event
2001-10-23	Mano Vikrant Singh employed by the Cargill group.
2003-09-01	Mano Vikrant Singh posted to Singapore.
2007-03-28	Cargill TSF Asia Pte Ltd sent employment contract to Mano Vikrant Singh.
2007-03-30	Mano Vikrant Singh executed Employment Contract and Non-Compete Agreement.
2008-11-04	Mano Vikrant Singh gave notice of resignation.
2008-11-04	Cargill TSF Asia Pte Ltd accepted Mano Vikrant Singh's resignation.
2010-10-19	Cargill TSF Asia Pte Ltd requested Mano Vikrant Singh to sign a statutory declaration.
2011-02-14	Mano Vikrant Singh commenced Originating Summons No 103 of 2011.
2012-08-07	Court of Appeal decision.

7. Legal Issues

Restraint of Trade
- Outcome: The court held that the forfeiture provision was an unenforceable restraint of trade because the deferred incentive award had already vested in the employee.
- Category: Substantive
- Sub-Issues:
  - Enforceability of forfeiture provisions
  - Reasonableness of restraint
  - Vesting of employee benefits
- Related Cases:
  - [2012] 1 SLR 311
  - [1933] 1 KB 793
  - [2008] 1 SLR(R) 663
  - [1894] AC 535

8. Remedies Sought

Declaration that the Forfeiture Provision is void
Payment of outstanding Deferred Incentive Awards
Contractual interest on the above sum, and costs

9. Cause of Actions

Breach of Contract
Declaration that Forfeiture Provision is void

10. Practice Areas

Commercial Litigation
Employment Law

11. Industries

Commodities Trading
Financial Services

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Mano Vikrant Singh v Cargill TSF Asia Pte Ltd	High Court	Yes	[2012] 1 SLR 311	Singapore	The appeal was against the decision of the judge in this case. The Court of Appeal disagreed with the judge's decision on the crucial issue of whether the forfeiture provision was in restraint of trade.
Wyatt v Kreglinger and Fernau	English Court of Appeal	Yes	[1933] 1 KB 793	England and Wales	Considered in relation to Forfeiture-for-Competition clause. The court disagreed with the critique of Wyatt to the effect that the decision in that case did not recognise that there was no impediment to the employee’s liberty to act and the “restraint” was completely voluntary as the employee chose not to compete in order to receive payouts from the employer.
Rick Lloyd v Commonwealth Bank of Australia Limited	New South Wales Industrial Relations Commission	Yes	[2006] NSWIRComm 129	Australia	Distinguished from the present case. In Rick Lloyd, the bonuses were not vested, and the clause was treated, instead, as a Payment-for-Loyalty clause.
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(R) 663	Singapore	Cited for the principle that the doctrine of restraint of trade applies in the context of employment.
Esso Petroleum Co Ltd v Harper’s Garage (Stourport) Ltd	House of Lords	Yes	[1968] AC 269	England and Wales	Cited as an example of a novel situation where the court re-examined the principles underlying the application of the restraint of trade doctrine.
Thorsten Nordenfelt (Pauper) v The Maxim Nordenfelt Guns and Ammunition Company, Limited	House of Lords	Yes	[1894] AC 535	England and Wales	Cited for the twin tests of reasonableness in restraint of trade cases.
CLAAS Medical Centre Pte Ltd v Ng Boon Ching	High Court	Yes	[2010] 2 SLR 386	Singapore	Cited as an example of the endorsement of the twin tests of reasonableness in the local context.
Stenhouse Australia Ltd v Marshall William Davidson Phillips	Australian Privy Council	Yes	[1974] 1 AC 391	Australia	Cited as an example of a situation where the commission sought to be forfeited pursuant to the clause concerned would in fact be earned independently by the former employee post employment.
Finnegan v J & E Davy	English High Court	Yes	[2007] IEHC 18	Ireland	Cited for the principle that the deferral or retention provision in the contract between the plaintiff and the defendant not only fell within the scope of the restraint of trade doctrine but also failed to pass muster under that particular doctrine.
Marshall v N M Financial Management Ltd	English High Court	Yes	[1995] 1 WLR 1461	England and Wales	Cited for the principle that the agent was not “entitled to any commission after termination” under the relevant clause.
Marshall v N M Financial Management Ltd	Court of Appeal	Yes	[1997] 1 WLR 1527	England and Wales	Applied Wyatt in holding that the clause concerned was within the scope of the restraint of trade doctrine.
Sadler v Imperial Life Assurance Co of Canada Ltd	English High Court	Yes	[1988] IRLR 388	England and Wales	Cited for the principle that the substance of the impugned clause was to deprive the employee of monies which had already been earned by him during his appointment as agent.
Bull v Pitney-Bowes Ltd and Others	English High Court	Yes	[1967] 1 WLR 273	England and Wales	Cited for the principle that there was no distinction in principle between a covenant not to take up certain skilled work and the discontinuance of a pension if one does choose to take up that work as both were inducements (and not mere incentives) not to trade.
Tribune Investment Trust Inc v Soosan Trading Co Ltd	Court of Appeal	Yes	[2000] 2 SLR(R) 407	Singapore	Cited for the principle that the function of the court is to try as far as practical experience allows, to ensure that the reasonable expectations of honest men are not disappointed.
Chwee Kin Keong and others v Digilandmall.com Pte Ltd	High Court	Yes	[2004] 2 SLR(R) 594	Singapore	Cited for the principle that the function of the court is to try as far as practical experience allows, to ensure that the reasonable expectations of honest men are not disappointed.
Jet Holding Ltd and others v Cooper Cameron (Singapore) Pte Ltd and another and other appeals	Court of Appeal	Yes	[2006] 3 SLR(R) 769	Singapore	Cited for the principle that the function of the court is to try as far as practical experience allows, to ensure that the reasonable expectations of honest men are not disappointed.
Tan Jin Sin and another v Lim Quee Choo	Court of Appeal	Yes	[2009] 2 SLR(R) 938	Singapore	Cited for the principle that the function of the court is to try as far as practical experience allows, to ensure that the reasonable expectations of honest men are not disappointed.
Hairman v FileNET Corporation Pty Limited	New South Wales Industrial Relations Commission	Yes	[2001] NSWIRComm 318	Australia	Cited for the principle that the employee had been aware that commission might be lost but was nonetheless prepared to accept it and could not thus complain.
Peninsula Business Services Limited v Mr J Sweeney	English Employment Appeal Tribunal	Yes	(2003) EAT/1096/02/SM	England and Wales	Cited for the principle that the commission penalty that Mr Sweeney suffered on resignation arose under a contractual term involving an unlawful restraint of trade.
Tullett Prebon PLC and others v BGC Brokers LP and others	English High Court	Yes	[2010] EWHC 484	England and Wales	Cited for the principle that the provisions which provide for the repayment of signing or retention payments where the employee does not serve out the full term are not provisions in restraint of trade.
O’Regan v Arbitration Forums, Inc	United States Court of Appeals, Seventh Circuit	Yes	121 F3d 1060	United States	Cited as an example of a case that views the restraint of trade from an anti-trust perspective, applying the rule of reason approach under the Sherman Act.
Ralph S Harris v Myron R Bolin	Minnesota Supreme Court	Yes	310 Minn 391	United States	Cited as an example of a case that involves a straightforward application of state law.
Lucente v International Business Machines Corporation	United States Court of Appeals, Second Circuit	Yes	310 F.3d 243	United States	Cited as an example of a case that applies the common law approach of restraint of trade with reference to the competing policy arguments of freedom of trade and freedom of contract.

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

Restraint of trade
Forfeiture provision
Deferred incentive award
Non-compete agreement
Vesting
American Employee Choice Doctrine
Payment-for-Loyalty clause

15.2 Keywords

restraint of trade
forfeiture provision
employee benefits
non-compete
employment contract
singapore
court of appeal

16. Subjects

Employment Law
Contract Law
Restraint of Trade

17. Areas of Law

Restraint of Trade
Contract Law
Employment Law