Scintronix v Ho Kang Peng: Director's Breach of Duty & Employee Fidelity in Employee Poaching & Payments
Scintronix Corp Ltd (formerly TTL Holdings Ltd) brought a claim in the High Court of Singapore against Ho Kang Peng, former Executive Director and CEO, for breach of fiduciary, statutory, and contractual duties, and against Chow Weng Fook, former Executive Director and Advisor, for breach of duties of fidelity and contractual duties. The court, presided over by Quentin Loh J, found Ho liable for breach of his fiduciary duty to avoid conflicts of interest by failing to seek board approval for advisor remuneration packages and for authorizing payments to Bontech for services not rendered. The claim against Chow was dismissed.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Judgment for Plaintiff in part against the first defendant, Ho Kang Peng; claim against the second defendant, Chow Weng Fook, dismissed.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Scintronix (formerly TTL) sued Ho Kang Peng and Chow Weng Fook for breach of duties. The court found Ho liable for conflict of interest and unauthorized payments.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Ho Kang Peng | Defendant | Individual | Judgment against Defendant | Lost | |
| Scintronix Corp Ltd (formerly known as TTL Holdings Ltd) | Plaintiff | Corporation | Judgment for Plaintiff in part | Partial | |
| Chow Weng Fook | Defendant | Individual | Claim Dismissed | Dismissed |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Quentin Loh | Judge | Yes |
4. Counsels
4. Facts
- Ho, as CEO, employed Chow and Ng as Advisors on the same terms as when they were directors, without formal board approval.
- TTL made payments to Bontech under an agreement for unspecified services, which were in fact not provided.
- Ho was involved in the departure of TTL employees to Fu Yu, allegedly a competitor of TTL.
- Chow was an advisor to both TTL and Fu Yu concurrently.
- TTL alleged that Chow diverted a potential business opportunity (the Jabil Contract) to Fu Yu.
- Ng and Chow were under investigation by the Commercial Affairs Department (CAD) in relation to their involvement in the management of another company, SNF Corporation Ltd (“SNF”).
5. Formal Citations
- Scintronix Corp Ltd (formerly known as TTL Holdings Ltd) v Ho Kang Peng and another, Suit No 207 of 2009, [2013] SGHC 34
- Scintronix Corporation Ltd (f.k.a TTL Holdings Limited) v Ho Kang Peng and another, , [2011] SGHC 28
6. Timeline
| Date | Event |
|---|---|
| Fu Yu identified as a competitor in TTL’s listing documents | |
| Arrangement begun to make payments to Mr Lee | |
| Remuneration Committee of TTL passed a resolution authorising the payment of a total monthly “outstation allowance” of RMB 40,000 | |
| Ho appointed CEO of TTL | |
| Chow appointed Executive Director and the Executive Chairman of TTL | |
| TTL entered into a “Consulting Agreement” with Bontech | |
| Ng resigned from his position as Executive Director and was employed as Advisor to TTL | |
| Terms of Reference for TTL’s Remuneration Committee had been amended | |
| Chow tendered his resignation and continued in the employment of TTL as an Advisor | |
| Ng and Chow became Advisors to Fu Yu | |
| Chow appointed as the Acting General Manager of Nano Technology Manufacturing Pte Ltd | |
| A letter of cessation of employment was signed by Ho for Toh | |
| Yeung signed a letter of termination of employment | |
| Ng appointed Acting General Manager (Northern China) for Fu Yu | |
| Chow appointed Acting General Manager (Southern China) of Fu Yu | |
| Ho resigned from his position as the CEO and Executive Chairman | |
| The Board resolved that Ng and Chow would be given the opportunity to resign | |
| TTL issued letters of termination to Ng and Chow | |
| Shanmugam tendered his resignation | |
| Ho remained a non-executive director | |
| Shanmugam's last day with TTL | |
| Shanmugam appointed Assistant General Manager (Technology Group) in Solid Micron Technologies | |
| Judgment reserved |
7. Legal Issues
- Breach of Fiduciary Duty
- Outcome: The court found Ho in breach of his fiduciary duty to avoid conflicts of interest and to act in the best interests of TTL.
- Category: Substantive
- Sub-Issues:
- Conflict of interest
- Failure to act in the best interests of the company
- Failure to ensure contracts are entered into at arm’s length
- Related Cases:
- [2009] 3 SLR 109
- Breach of Duty of Fidelity
- Outcome: The court did not find Chow in breach of his duty of fidelity.
- Category: Substantive
- Sub-Issues:
- Conflict of interest
- Poaching of employees
- Having a second job which interferes with the efficient performance of duties
- Breach of Contract
- Outcome: The court did not find Chow in breach of contract.
- Category: Substantive
- Sub-Issues:
- Failure to perform contractual duties
- Inciting other employees to commit breaches of company rules and regulations
- Proper Purpose Doctrine
- Outcome: The court considered the proper purpose doctrine in the context of the director's duty to act bona fide in the interests of the company.
- Category: Substantive
- Related Cases:
- [1974] AC 821
8. Remedies Sought
- Monetary Damages
9. Cause of Actions
- Breach of Fiduciary Duty
- Breach of Contract
- Breach of Duty of Fidelity
- Breach of Statutory Duty
10. Practice Areas
- Commercial Litigation
- Corporate Law
11. Industries
- Plastics Industry
- Manufacturing
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Scintronix Corporation Ltd (f.k.a TTL Holdings Limited) v Ho Kang Peng and another | High Court | Yes | [2011] SGHC 28 | Singapore | Procedural history of the case, relating to an order for bifurcation. |
| Ng Eng Ghee and others v Mamata Kapildev Dave and others | Court of Appeal | Yes | [2009] 3 SLR 109 | Singapore | Cited for the principle that a fiduciary may not place himself in a position where his personal interest may conflict with his duty to his principal. |
| Bray v Ford | N/A | Yes | [1896] AC 44 | England | Cited as authority for the inflexible rule that a fiduciary may not place himself in a position in which his personal interest may conflict with his duty to his principal. |
| Howard Smith Ltd v Ampol Petroleum and others | Privy Council | Yes | [1974] AC 821 | England | Cited for the test of whether a power was exercised for a proper purpose and whether the exercise of the power was in the interest of the company. |
| Multi-Pak Singapore Pte Ltd v Intraco Ltd | N/A | Yes | [1994] 3 SLR(R) 1064 | Singapore | Cited for the principle that in assessing whether a decision is in the interest of the company, the court will view the decision in the proper commercial context. |
| Smile Inc Dental Surgeons Pte Ltd v Lui Andrew Stewart | Court of Appeal | Yes | [2012] 4 SLR 308 | Singapore | Cited for the distinction between the duties of fidelity and fiduciary duties. |
| Nottingham University v Fishel | English High Court | Yes | [2000] IRLR 471 | England | Cited for the principle that care must be taken not automatically to equate the duties of good faith and loyalty, or trust and confidence, with fiduciary obligations. |
| Attorney General v Blake | Court of Appeal | Yes | [1998] 2 WLR 805 | England | Cited for the proposition that a potential conflict per se would be a breach of an employee’s duty of fidelity. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| s 157(1) of the Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Fiduciary Duty
- Duty of Fidelity
- Conflict of Interest
- Employee Poaching
- Board Approval
- Remuneration Package
- Consulting Agreement
- Advisor
- Executive Director
- CEO
- Companies Act
- Employee Handbook
15.2 Keywords
- fiduciary duty
- breach of contract
- conflict of interest
- employee poaching
- TTL Holdings
- Scintronix
- Ho Kang Peng
- Chow Weng Fook
- director duties
- employee fidelity
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Fiduciary Duties | 85 |
| Director's Duties | 75 |
| Company Law | 70 |
| Corporate Law | 50 |
| Employment Law | 40 |
| Contract Law | 30 |
16. Subjects
- Corporate Governance
- Employment
- Fiduciary Duties
- Contract Law