Hewlett-Packard v Chin Shu Hwa: Contractual Ambiguity & Construction Rules

The Court of Appeal heard an appeal by Hewlett-Packard Singapore (Sales) Pte Ltd against Corinna Chin Shu Hwa regarding a dispute over sales incentive compensation. Chin claimed she was owed compensation for a contract with Network for Electronic Transfers (Singapore) Pte Ltd (NETS). The court addressed whether the NETS contract qualified as "new business" under the company's sales incentive scheme and whether her final incentive pay should be calculated with full-year or pro-rated targets. The Court of Appeal allowed the appeal, ruling in favor of Hewlett-Packard.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal Allowed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Appeal regarding sales incentive compensation. The court addressed contractual ambiguity and the contra proferentem rule, ruling in favor of Hewlett-Packard.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
HEWLETT-PACKARD SINGAPORE (SALES) PTE LTDAppellant, DefendantCorporationAppeal AllowedWon
CORINNA CHIN SHU HWARespondent, PlaintiffIndividualAppeal DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Sundaresh MenonChief JusticeNo
Chao Hick TinJudge of AppealNo
Andrew Phang Boon LeongJudge of AppealYes

4. Counsels

Counsel NameOrganization
Pradeep NairRajah & Tann Singapore LLP
Gregory VijayendranRajah & Tann Singapore LLP
Lester ChuaRajah & Tann Singapore LLP
Soon Meiyi GeraldineKhattarWong LLP
P E AshokanKhattarWong LLP

4. Facts

  1. Corinna Chin Shu Hwa was employed by Hewlett-Packard Singapore (Sales) Pte Ltd from 2005 to 2012.
  2. Chin claimed incentive compensation for securing a contract with NETS.
  3. The dispute centered on whether the NETS contract qualified as 'new business' under HP's incentive scheme.
  4. NETS had been using HP servers but considered switching to IBM.
  5. NETS signed an agreement with IBM but continued using HP servers during the migration period.
  6. HP's incentive scheme included a 'New Business Metric' (NBM) to encourage sales to new customers.
  7. The court had to determine if NETS was a 'new end-user customer' or if the contract involved a 'new application' or 'new area'.

5. Formal Citations

  1. Hewlett-Packard Singapore (Sales) Pte Ltd v Chin Shu Hwa Corinna, Civil Appeal No 109 of 2015, [2016] SGCA 19

6. Timeline

DateEvent
Corinna Chin Shu Hwa employed by Hewlett-Packard Singapore (Sales) Pte Ltd
Financial year 2012 commenced
NETS contract secured
Corinna Chin Shu Hwa's employment terminated
Suit No 918 of 2012 heard in High Court
Judgment reserved
Judgment delivered

7. Legal Issues

  1. Contractual Ambiguity
    • Outcome: The court found that the term 'new end-user customer' was not ambiguous and excluded NETS in the context of the NETS contract.
    • Category: Substantive
    • Sub-Issues:
      • Interpretation of 'new end-user customer'
      • Application of contra proferentem rule
  2. Sales Incentive Compensation
    • Outcome: The court found that the employee's final incentive pay should be calculated with reference to full-year targets.
    • Category: Substantive
    • Sub-Issues:
      • Calculation of final incentive pay
      • Full-year targets vs. pro-rated targets
  3. Promissory Estoppel
    • Outcome: The court found that no estoppel arises in the present case.
    • Category: Substantive
    • Sub-Issues:
      • Implied promise
      • Detrimental reliance

8. Remedies Sought

  1. Monetary Damages

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Technology
  • Finance

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
YES F&B Group Pte Ltd v Soup Restaurant Singapore Pte Ltd (formerly known as Causeway Point) Pte LtdCourt of AppealYes[2015] 5 SLR 1187SingaporeCited as an example of difficulties of application in contractual interpretation.
Lucky Realty Co Pte Ltd v HSBC Trustee (Singapore) LtdCourt of AppealYes[2016] 1 SLR 1069SingaporeCited as an example of difficulties of application in contractual interpretation.
L Schuler AG v Wickman Machine Tool Sales LtdHouse of LordsYes[1974] AC 235England and WalesCited for the principle that ambiguity is not to be equated with difficulty of construction.
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte LtdCourt of AppealYes[2008] 3 SLR(R) 1029SingaporeCited for the endorsement of the contextual approach to contractual interpretation.
McCann v Switzerland Insurance Australia Ltd and OthersHigh CourtYes(2000) 176 ALR 711AustraliaCited for the principle that the contra proferentem rule is one of last resort.
LTT Global Consultants v BMC Academy Pte LtdHigh CourtYes[2011] 3 SLR 903SingaporeCited for the principle that the contra proferentem rule cannot apply to create an ambiguity where one does not exist.
McGeown v Direct Travel InsuranceEnglish Court of AppealYes[2004] 1 All ER (Comm) 609England and WalesCited for the principle that a court should be wary of starting its analysis by finding an ambiguity by reference to the words in question looked at on their own.
Bromarin AB and another v IMD Investments LtdEnglish Court of AppealYes[1999] STC 301England and WalesCited for the principle that problems of construction do arise where the circumstances which actually arise are not circumstances which the parties foresaw at the time when they made the agreement.
James Miller & Partners Ltd v Whitworth Street Estate (Manchester) LtdHouse of LordsYes[1970] AC 583England and WalesCited for the principle that it is not legitimate to use as an aid in the construction of the contract anything which the parties said or did after it was made.
Gay Choon Ing v Loh Sze Ti Terence Peter and another appealCourt of AppealYes[2009] 2 SLR(R) 332SingaporeCited for the principle that subsequent conduct that was in direct contradiction of the terms of the concluded contract could not be admitted to interpret the contract concerned.
Lian Hwee Choo Phebe v Maxz Universal Development Group Pte LtdCourt of AppealYes[2009] 2 SLR(R) 624SingaporeCited for the principle that a contract must generally be interpreted as at the date it was made and in light of the circumstances prevailing on the date.
Xia Zhengyan v Geng ChangqingCourt of AppealYes[2015] 3 SLR 732SingaporeCited as an example of a case where the question of the admissibility of subsequent conduct remains an open one that should be decided on a more appropriate occasion.
Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another appealCourt of AppealYes[2013] 4 SLR 193SingaporeCited for the requirements of civil procedure that must be borne in mind when considering the admissibility of evidence.
Corinna Chin Shu Hwa v Hewlett-Packard Singapore (Sales) Pte LtdHigh CourtYes[2015] SGHC 204SingaporeThe decision of the High Court judge that is being appealed against in this case.
North v MarinaSupreme Court of New South WalesYes[2003] NSWSC 64AustraliaCited for the principle that the role of the contra proferentem maxim is to enable the court to choose between alternative meanings of the document or clause in question, being meanings which are fairly open.

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

  • New Business Metric
  • New end-user customer
  • Technology refresh
  • Up-sells
  • Contra proferentem
  • Sales incentive compensation
  • Pro-rated targets
  • Full-year targets
  • NETS Contract
  • NonStop servers

15.2 Keywords

  • contract
  • sales
  • incentive
  • compensation
  • hewlett-packard
  • NETS
  • new business
  • ambiguity
  • construction
  • interpretation

17. Areas of Law

Area NameRelevance Score
Contract Law90
Interpretation of contractual terms80
Breach of Contract60

16. Subjects

  • Contract Law
  • Employment Law
  • Sales Incentive Schemes