Max-Sun Trading v Tang Mun Kit: Contract Formation, Fiduciary Duty, Conspiracy, Inducement of Breach

Max-Sun Trading Ltd and E-Tex Trading Ltd, Hong Kong-incorporated companies, brought a suit in the High Court of the Republic of Singapore against Tang Mun Kit and Teo Su Huang, alleging breaches of contract, fiduciary duty, conspiracy, and inducement of breach of contract related to a garment manufacturing arrangement. The court, presided over by Judith Prakash JA, dismissed all of the plaintiffs' claims, finding that the alleged contracts either did not exist or did not concern the plaintiffs or the defendants, and that the plaintiffs' claims in tort, fiduciary law, and under statute also failed. The defendants' claims for indemnity or contribution from the third party, Tan Siew Moi, were also dismissed.

1. Case Overview

1.1 Court

High Court of the Republic of Singapore

1.2 Outcome

Plaintiffs' claims dismissed in their entirety.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Hong Kong companies Max-Sun Trading and E-Tex Trading sue Tang Mun Kit and Teo Su Huang for breach of contract, fiduciary duty, conspiracy, and inducement of breach of contract. The court dismissed all claims.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
MAX-SUN TRADING LTDPlaintiffCorporationClaim DismissedLost
E-TEX TRADING LTDPlaintiffCorporationClaim DismissedLost
TANG MUN KITDefendantIndividualJudgment for DefendantWon
TEO SU HUANGDefendantIndividualJudgment for DefendantWon
TAN SIEW MOIThird PartyIndividualClaims DismissedNeutral

3. Judges

Judge NameTitleDelivered Judgment
Judith PrakashJudge of AppealYes

4. Counsels

Counsel NameOrganization
Tan Heng ThyeCSP Legal LLC
Rachael WilliamsCSP Legal LLC

4. Facts

  1. Max-Sun Trading Ltd is a fabric manufacturer; E-Tex Trading Ltd is a buying house.
  2. Mr. Leonard Mok Chi Wing represented both plaintiffs.
  3. The defendants, Mr. Tang Mun Kit and Mdm. Teo Su Huang, ran Instinct Silkscreen Pte Ltd.
  4. Mr. Tan Siew Kah and Mdm. Tan Siew Moi also ran a garment manufacturing business.
  5. In July 2006, discussions occurred regarding setting up a garment factory in Vietnam.
  6. Elda Instinct Garments Pte Ltd was incorporated in Singapore on 27 September 2006.
  7. Elda Singapore obtained loans from the first plaintiff for working capital and machinery.
  8. Relations between the defendants and the Tans soured due to conflict.
  9. The first defendant fabricated meeting minutes to remove Mr. Peter Tan from his positions.
  10. Esprit ceased placing further orders with the second plaintiff due to delays.
  11. The first plaintiff wound up Elda Singapore on 4 September 2009.

5. Formal Citations

  1. Max-Sun Trading Ltd and another v Tang Mun Kit and another (Tan Siew Moi, third party), Suit No 715 of 2011, [2016] SGHC 203

6. Timeline

DateEvent
Dealings began between Mr. Mok, the defendants, and the Tans in the garment industry.
Mr. Mok, the first defendant, and Mr. Peter Tan engaged in discussions regarding setting up a garment factory in Vietnam.
Elda Instinct Garments Pte Ltd (Elda Singapore) was incorporated in Singapore.
Elda Singapore obtained a loan of US$100,000 from the first plaintiff for working capital.
Elda Instinct Garments Vietnam Co Ltd (Elda Vietnam) was incorporated in Vietnam.
The first plaintiff provided a second loan to Elda Singapore amounting to US$116,780 for the purchase of sewing machines.
The second plaintiff and Elda Singapore entered into a contract setting out the general conditions of purchase and delivery.
The second plaintiff began placing orders that were successfully fulfilled by Elda Vietnam.
Mr. Mok persuaded the first defendant to agree to appoint Mr. Peter Tan as the legal representative and general director of Elda Vietnam and the authorised representative of Elda Singapore.
A resolution was passed to appoint Mr. Peter Tan as legal representative and general director of Elda Vietnam and the authorised representative of Elda Singapore.
Elda Singapore failed to repay the Working Capital Loan.
Defendants allegedly used Elda Vietnam's factory to manufacture garments for sale to customers other than the second plaintiff.
The first defendant proposed that Elda Vietnam be legally divided into two separate companies.
The defendants purported to convene a meeting of the members’ council and voted to remove Mr. Peter Tan from his positions.
The first defendant obtained the company seal from Mr. Peter Tan.
The plaintiffs and the defendants allegedly arrived at an oral agreement for the plaintiffs to purchase the defendants’ shares in Elda Singapore.
The first plaintiff succeeded in having Elda Singapore wound up by the court.
Hearing commenced.
Hearing continued.
Hearing concluded.
Judgment reserved.

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court found that the alleged contracts either did not exist or did not concern the plaintiffs or the defendants.
    • Category: Substantive
  2. Breach of Fiduciary Duty
    • Outcome: The court found that any claim against the defendants for failure to consider the interests of Elda Singapore’s creditors must be brought by the liquidator of Elda Singapore, not by the plaintiffs.
    • Category: Substantive
  3. Conspiracy by Unlawful Means
    • Outcome: The court found that the plaintiffs failed to prove that there was a combination of conspirators or an intention to injure the plaintiffs.
    • Category: Substantive
  4. Inducing Breach of Contract
    • Outcome: The court found that the defendants did not intend for the contracts to be breached.
    • Category: Substantive
  5. Negligence
    • Outcome: The court found that there was insufficient proximity to impose a tortious duty of care on the defendants.
    • Category: Substantive

8. Remedies Sought

  1. Monetary Damages
  2. Indemnity

9. Cause of Actions

  • Breach of Contract
  • Conspiracy
  • Inducement of Breach of Contract
  • Negligence
  • Breach of Fiduciary Duty
  • Violation of Section 340(1) of the Companies Act
  • Indemnity

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Garment Industry
  • Manufacturing

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
EFT Holdings, Inc and another v Marinteknik Shipbuilders (S) Pte Ltd and anotherSingapore High CourtYes[2014] 1 SLR 860SingaporeCited for the principle that where parties do not plead foreign law, the court will apply Singapore law by default.
United Artists Singapore Theatres Pte Ltd and another v Parkway Properties Pte Ltd and anotherSingapore High CourtNo[2003] 1 SLR(R) 791SingaporeCited for the principle that agreements to negotiate a future contract do not have contractual force.
Courtney & Fairbairn Ltd v Tolaini Brothers (Hotels) LtdUnknownNo[1975] 1 WLR 297England and WalesCited for the principle that agreements to negotiate a future contract do not have contractual force.
Parkway Properties Pte Ltd and another v United Artists Singapore Theatres Pte Ltd and anotherSingapore High CourtYes[2003] 2 SLR(R) 103SingaporeAffirmed the decision in United Artists Singapore Theatres Pte Ltd and another v Parkway Properties Pte Ltd and another [2003] 1 SLR(R) 791 without dispute on the point regarding agreements to negotiate a future contract.
Cobbe v Yeoman’s Row Management Ltd and anotherUnknownNo[2008] 1 WLR 1752England and WalesCited as an example of business people incurring significant expenses pursuing endeavors which had not been contractually agreed.
Ng Giap Hon v Westcomb Securities Pte Ltd and othersSingapore High CourtNo[2009] 3 SLR(R) 518SingaporeCited for the principle that a general implied duty of good faith in the performance of contracts does not exist in Singapore law.
Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another appealSingapore Court of AppealNo[2013] 4 SLR 193SingaporeCited for the test to imply a term in fact.
Kuwait Oil Tanker Co SAK v Al BaderUnknownNo[2000] 2 All ER (Comm) 271England and WalesCited for the principle that all conspirators must be sufficiently aware of the surrounding circumstances and share the object for it properly to be said that they were acting in concert at the time of the acts complained of.
Spandeck Engineering (S) Pte Ltd v Defence Science & Technology AgencySingapore Court of AppealNo[2007] 4 SLR(R) 100SingaporeCited for the two-stage test to determine the existence of a duty of care.
Sutherland Shire Council v HeymanHigh Court of AustraliaNo(1985) 60 ALR 1AustraliaCited for the principle that proximity is determined with reference to the relationship between the parties in so far as it is relevant to the allegedly negligent act or omission of the defendant and the loss or injury sustained by the plaintiff.
Animal Concerns Research & Education Society v Tan Boon KweeSingapore High CourtNo[2011] 2 SLR 146SingaporeCited for the principle that where the parties have chosen to structure their commercial relationship by way of a contract, the court must ask whether the parties intended, by their choice of that structure, to exclude a tortious duty of care.
Henderson v Merrett Syndicates LtdHouse of LordsNo[1995] 2 AC 145England and WalesCited for the principle that where the parties have chosen to structure their commercial relationship by way of a contract, the court must ask whether the parties intended, by their choice of that structure, to exclude a tortious duty of care.
Pacific Associates Inc v BaxterUnknownNo[1990] 1 QB 993England and WalesCited for the principle that imposing a tortious duty of care would cut across and be inconsistent with the structure of relationships created by the contracts, into which the parties had entered.
M+W Singapore Pte Ltd v Leow Tet Sin and anotherSingapore High CourtNo[2015] 2 SLR 271SingaporeCited for the requirements to establish the tort of inducing breach of contract.
Liquidators of Progen Engineering Pte Ltd v Progen Holdings LtdSingapore Court of AppealNo[2010] 4 SLR 1089SingaporeCited for the principle that the fiduciary duty of directors of an insolvent company to consider the interests of the company’s creditors is owed to the company, not directly to the creditors.
Yukong Line Ltd of Korea v Rendsburg Investments Corporation of Liberia (No 2)UnknownNo[1998] 1 WLR 294England and WalesCited for the principle that individual creditors cannot, without the assistance of liquidators, directly recover from the directors for breaches of fiduciary duty.
Re Pantone 485 Ltd, Miller v BainUnknownNo[2002] 1 BCLC 266England and WalesCited for the principle that individual creditors cannot, without the assistance of liquidators, directly recover from the directors for breaches of fiduciary duty.
Goh Sin Huat Electrical Pte Ltd v Ho See Jui (trading as Xuanhua Art Gallery) and anotherSingapore Court of AppealNo[2012] 3 SLR 1038SingaporeCited for the principle that a right of indemnity arises either as an express or implied contractual obligation or as a remedy available upon the breach of an equitable or legal duty.
Eastern Shipping Company, Limited v Quah Beng KeePrivy CouncilNo[1924] AC 177United KingdomCited for the principle that a right of indemnity arises either as an express or implied contractual obligation or as a remedy available upon the breach of an equitable or legal duty.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Companies Act (Cap 50, 2006 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Garment Manufacturing
  • Joint Venture Agreement
  • Working Capital Loan
  • Machinery Loan
  • Appointment Agreement
  • Elda Division Agreement
  • Share Purchase Agreement
  • Unlawful Means Conspiracy
  • Inducing Breach of Contract
  • Fiduciary Duty
  • Companies Act
  • Indemnity

15.2 Keywords

  • Contract
  • Fiduciary
  • Conspiracy
  • Breach
  • Garment
  • Singapore
  • Elda
  • Vietnam

17. Areas of Law

Area NameRelevance Score
Contract Law75
Torts65
Chancery and Equity60
Inducement of Breach of Contract60
Conspiracy55
Fiduciary Duties50
Corporate Law30

16. Subjects

  • Contract Law
  • Tort Law
  • Company Law
  • Fiduciary Duty