Schonk v Enholco: Breach of Employee Duties & Equitable Compensation

Schonk Antonius Martinus Mattheus and International Oil and Gas Consultants Pte Ltd appealed against the High Court's decision regarding breaches of duties owed to Enholco Pte Ltd. Enholco Pte Ltd also appealed against the dismissal of certain heads of losses. The Court of Appeal dismissed the defendants' appeal on liability but allowed it in part regarding the Salary Counterclaim. The Court also allowed in part Enholco Pte Ltd’s appeal with respect to unauthorized expenses and loss of future profits.

1. Case Overview

1.1 Court

Court of Appeal

1.2 Outcome

Appeal Allowed in Part

1.3 Case Type

Civil

1.4 Judgment Type

Ex-Tempore Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Appeal concerning breaches of duties by an employee who diverted business opportunities. The court dismissed the appeal on liability but allowed it in part regarding unpaid salaries and unauthorized expenses.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Schonk Antonius Martinus MattheusAppellant, RespondentIndividualAppeal Allowed in PartPartial
International Oil and Gas Consultants Pte LtdAppellant, RespondentCorporationAppeal Dismissed in PartPartial
Enholco Pte LtdRespondent, AppellantCorporationAppeal Allowed in PartPartial

3. Judges

Judge NameTitleDelivered Judgment
Sundaresh MenonChief JusticeYes
Chao Hick TinJudge of AppealNo
Judith PrakashJudgeNo

4. Counsels

Counsel NameOrganization
See Chern YangPremier Law LLC
Premalatha SilwarajuPremier Law LLC
N SreenivasanStraits Law Practice LLC
VithyashreeStraits Law Practice LLC
Timothy SooStraits Law Practice LLC

4. Facts

  1. Mr. Mattheus was employed by Enholco Pte Ltd in 1989 as a sales manager.
  2. Mr. Mattheus became responsible for Unit 2 of Enholco Pte Ltd's business in 2001.
  3. Negotiations for Mr. Mattheus to purchase shares in Enholco Pte Ltd broke down in March 2012.
  4. Mr. Mattheus incorporated International Oil and Gas Consultants Pte Ltd on 5 April 2012.
  5. Mr. Mattheus diverted customer accounts from Enholco Pte Ltd to International Oil and Gas Consultants Pte Ltd.
  6. Enholco Pte Ltd terminated Mr. Mattheus' employment on 24 August 2012.
  7. Mr. Mattheus incurred unauthorized expenses during his employment.

5. Formal Citations

  1. Schonk Antonius Martinus Mattheus and anothervEnholco Pte Ltd and another appeal, Civil Appeal Nos 47 and 106 of 2015, [2015] SGCA 65

6. Timeline

DateEvent
Enholco Pte Ltd incorporated
Mr. Mattheus employed by Enholco Pte Ltd as a sales manager
Mr. Mattheus became operationally responsible for Unit 2
Negotiations between Mr. Mattheus and Mr. Gerhard broke down
Mr. Gerhard revoked Mr. Mattheus’ authorized signatory status
Mr. Mattheus incorporated International Oil and Gas Consultants Pte Ltd
Mr. Mattheus' employment terminated
Proceedings commenced by Enholco Pte Ltd
Parties heard in court
Further submissions tendered
Judgment Reserved

7. Legal Issues

  1. Breach of Fiduciary Duty
    • Outcome: The court found that Mr. Mattheus breached his fiduciary duty by diverting business opportunities and incurring unauthorized expenses.
    • Category: Substantive
    • Sub-Issues:
      • Diversion of business opportunities
      • Unauthorized expenses
  2. Entitlement to Salary
    • Outcome: The court held that Mr. Mattheus was entitled to his salary for April and May 2012, but not for the subsequent months as he no longer considered himself an employee.
    • Category: Substantive
  3. Causation of Loss of Future Profits
    • Outcome: The court found that Mr. Mattheus' breach of duty caused Enholco Pte Ltd's loss of future profits.
    • Category: Substantive

8. Remedies Sought

  1. Monetary Damages
  2. Equitable Compensation

9. Cause of Actions

  • Breach of Fiduciary Duty
  • Breach of Contract

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Oil and Gas

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Enholco Pte Ltd v Schonk Antonius Martinus Mattheus and anotherHigh CourtYes[2015] SGHC 20SingaporeRefers to the Judge’s decisions on liability.
Enholco Pte Ltd v Schonk Antonius Martinus Mattheus and anotherHigh CourtYes[2015] SGHC 108SingaporeRefers to the Judge’s decisions on quantum.
Sim v Rotherham Metropolitan Borough CouncilChancery DivisionYes[1987] 1 Ch 216England and WalesCited for the principle that an employer may withhold payment of salary where there is a total failure of consideration.
Imageview Management Limited v JackEngland and Wales Court of Appeal (Civil Division)Yes[2009] EWCA Civ 63England and WalesCited as an example of a case concerning principal and agent relationships where a football agent’s commission was forfeited.
Avrahami and others v Biran and othersHigh Court of JusticeYes[2013] EWHC 1776England and WalesCited as an example of a case concerning principal and agent relationships where management fees were forfeited.
Bank of Ireland v Jaffery and anotherHigh Court of JusticeYes[2012] EWHC 1377 (Ch)England and WalesCited to differentiate between agent/principal and employment relationships, and to show that it would be unfair to require an employee to repay salaries and bonuses.
William R. Barnes Co. v. MackenzieOntario Court of AppealYesWilliam R. Barnes Co. v. Mackenzie (1974), 2 O.R. (2d) 659CanadaCited for the principle that an employer's remedy against a defaulting servant is restricted to a right of instant dismissal and to damages which flow from the default.
Sagar v H Ridehalgh and Son, LimitedChancery DivisionYes[1931] 1 Ch 310England and WalesCited for the principle that an employer may make a deduction from the salary in respect of such loss as it proves it has suffered by reason of the employee’s breach.
Mady Development Corp and others v Rossetto and othersOntario Court of AppealYesMady Development Corp and others v Rossetto and others (2012) ONCA 31CanadaCited for the importance of distinguishing between a relationship of agent and principal and an employment relationship.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • Diversion of business opportunities
  • Unit 2 Agreement
  • Salary Counterclaim
  • Unauthorized expenses
  • Loss of future profits
  • Equitable compensation
  • Fiduciary duty
  • Employment contract
  • Repudiatory breach

15.2 Keywords

  • employment law
  • breach of duty
  • fiduciary duty
  • equitable compensation
  • oil and gas
  • singapore
  • appeal

17. Areas of Law

Area NameRelevance Score
Employment Law90
Employees’ Duties80
Fiduciary Duties70
Equitable Compensation70
Pay60
Chancery and Equity60
Breach of Contract50
Contract Law30

16. Subjects

  • Employment Dispute
  • Breach of Duty
  • Corporate Governance