Tongbao v Woon: Breach of Fiduciary Duty & Equitable Compensation in Joint Venture for Vessel Construction
In Tongbao (Singapore) Shipping Pte Ltd v Woon Swee Huat, the Singapore High Court addressed a breach of fiduciary duty claim arising from a joint venture to construct a vessel. Tongbao (Singapore) Shipping Pte Ltd and Tongbao Marine Pte Ltd sued Woon Swee Huat, Uni-Werks Marine and Engineering Pte Ltd, and Thia Kok Wah, alleging breaches of joint venture duties and director duties related to the construction of a 45-meter anchor handling tug. The court found that Woon breached his duties by prioritizing other projects and misusing funds, and that Thia, as a director, also breached his duties. The court ordered the defendants to pay equitable compensation to the plaintiffs.
1. Case Overview
1.1 Court
High Court of the Republic of Singapore1.2 Outcome
Judgment for Plaintiffs
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Singapore court finds Woon breached JV duties in vessel construction, prioritizing other projects. Liable for equitable compensation with UWM & Thia.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Tongbao (Singapore) Shipping Pte Ltd | Plaintiff | Corporation | Claim Allowed | Won | |
| Tongbao Marine Pte Ltd | Plaintiff | Corporation | Claim Allowed | Won | |
| Woon Swee Huat | Defendant | Individual | Counterclaim Dismissed | Lost | |
| Uni-Werks Marine and Engineering Pte Ltd | Defendant | Corporation | Counterclaim Partially Allowed | Partial | |
| Thia Kok Wah | Defendant | Individual | Claim Allowed | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Audrey Lim | Judicial Commissioner | Yes |
4. Counsels
4. Facts
- TBS and Woon entered a joint venture to construct a vessel, with costs shared 60-40.
- Woon was responsible for supervising the vessel's construction.
- The vessel was initially built at CFB and later moved to TKBI.
- TBS disbursed over US$5.6 million for the vessel construction.
- Woon used funds meant for the vessel to finance other projects.
- The vessel's completion was significantly delayed.
- Thia, as a director of TBS, participated in the diversion of funds.
5. Formal Citations
- Tongbao (Singapore) Shipping Pte Ltd and another v Woon Swee Huat and others, Suit No 1294 of 2014, [2018] SGHC 165
6. Timeline
| Date | Event |
|---|---|
| Tongbao (Singapore) Shipping Pte Ltd incorporated | |
| Thia suggests to Yu and Low that the Vessel be constructed in Indonesia | |
| Uni-Werks Marine and Engineering Pte Ltd incorporated | |
| Low, Zikif Effendy and Lie Tjit Kui joined UWM as shareholders | |
| Shipbuilding Contract signed | |
| TBS obtained a term loan facility from DBS Bank of US$4 million for the Vessel construction | |
| Tongbao Marine Pte Ltd incorporated | |
| Thia and Low sold their shares in TBS | |
| Vessel launched | |
| Vessel transferred from TBS to TBM | |
| Yang appointed as director of TBS | |
| Yu requested Woon and Thia to provide a full and proper account to TBS of the Vessel construction costs | |
| Woon resigned as UWM’s director | |
| Plaintiffs commenced action | |
| Vessel completed | |
| UWM “rescinded” the Shipbuilding Contract | |
| Judgment reserved |
7. Legal Issues
- Breach of Fiduciary Duty
- Outcome: The court found that Woon and Thia breached their fiduciary duties.
- Category: Substantive
- Sub-Issues:
- Conflict of interest
- Failure to act in good faith
- Diversion of funds
- Related Cases:
- [2017] 1 SLR 654
- [2017] 2 SLR 592
- Equitable Compensation
- Outcome: The court awarded equitable compensation to the plaintiffs.
- Category: Remedial
- Related Cases:
- [2013] 3 SLR 631
- [2014] 1 SLR 245
8. Remedies Sought
- Equitable Compensation
9. Cause of Actions
- Breach of Fiduciary Duty
- Dishonest Assistance
10. Practice Areas
- Commercial Litigation
- Construction Disputes
11. Industries
- Shipping
- Construction
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Ross River Ltd and another v Waveley Commercial Ltd and others | England and Wales Court of Appeal | Yes | [2013] EWCA Civ 910 | England and Wales | Cited for the principle that the presence of a joint venture relationship can create fiduciary obligations, although it does not necessarily do so. |
| Red Hill Iron Ltd v API Management Pty Ltd | Western Australia Supreme Court | Yes | [2012] WASC 323 | Australia | Cited for the principle that where there is an underlying contractual relationship between the parties, the extent and nature of any fiduciary obligations owed in any particular case would be informed by the terms of the underlying contract. |
| Tan Yok Koon v Tan Choo Suan and another and other appeals | Court of Appeal | Yes | [2017] 1 SLR 654 | Singapore | Cited for the principle that the fiduciary must act bona fide in the best interests of the principal. |
| Goh Chan Peng and others v Beyonics Technology Ltd and another and another appeal | Court of Appeal | Yes | [2017] 2 SLR 592 | Singapore | Cited for the principle that the core duty of a director to the company is part subjective and part objective. |
| GHLM Trading Limited v Anil Kumar Maroo and others | England and Wales High Court | Yes | [2012] EWHC 61 (Ch) | England and Wales | Cited for the principle that there is no standalone positive duty of disclosure; instead, this forms part of the fundamental duty to act in what the fiduciary considers in good faith to be in the best interests of the principal. |
| Shepherds Investments Ltd v Walters | England and Wales High Court | Yes | [2007] 2 BCLC 202 | England and Wales | Cited for the principle that it can be incumbent on the fiduciary to disclose matters other than wrongdoing; the touchstone is what would be in the best interests of the principal. |
| Hewlett-Packard Singapore (Sales) Pte Ltd v Chin Shu Hwa Corinna | High Court | Yes | [2016] 2 SLR 1083 | Singapore | Cited for the principle that post-contractual conduct must be viewed with utmost scrutiny. |
| Centre for Laser and Aesthetic Medicine Pte Ltd v GPK Clinic (Orchard) Pte Ltd and others and another appeal | High Court | Yes | [2018] 1 SLR 180 | Singapore | Cited for the principle that there is no blanket prohibition in the use of post-contractual evidence in contractual interpretation and I find that they provide “cogent evidence” of the parties’ agreement at the time when the JV was concluded. |
| Quality Assurance Management Asia Pte Ltd v Zhang Qing and others | High Court | Yes | [2013] 3 SLR 631 | Singapore | Cited for the principles of equitable compensation. |
| Then Khek Koon and another v Arjun Permanand Samtani and another and other suits | High Court | Yes | [2014] 1 SLR 245 | Singapore | Cited for the principles of equitable compensation. |
| Maryani Sadeli v Arjun Permanand Samtani and another and other appeals | Court of Appeal | Yes | [2015] 1 SLR 496 | Singapore | Cited as the Court of Appeal determined the case on a different point and found it unnecessary to wade into the morass of complex and thorny issues relating to causation test for equitable compensation |
| Beyonics Technology Ltd and another v Goh Chan Peng and others | High Court | Yes | [2016] SGHC 120 | Singapore | Cited for the principle that where a defendant (against whom a claim for dishonest assistance was made) was the controlling director or mind of the company, his knowledge can also be imputed on the company |
| Von Roll Asia Pte Ltd v Goh Boon Gay and others | High Court | Yes | [2017] SGHC 82 | Singapore | Cited for the principle that where a defendant (against whom a claim for dishonest assistance was made) was the controlling director or mind of the company, his knowledge can also be imputed on the company |
| George Raymond Zage III and another v Ho Chi Kwong and another | High Court | Yes | [2010] 2 SLR 589 | Singapore | Cited for the elements that must be made out for dishonest assistance. |
| Libertarian Investments Ltd v Thomas Alexej Hall | Hong Kong Court of Final Appeal | Yes | [2013] HKCFA 93 | Hong Kong | Cited for the historical context of equity courts granting monetary remedies to custodial fiduciaries after a preliminary step of accounting. |
| Agricultural Land Management v Jackson No (2) | Western Australia Supreme Court | Yes | [2014] WASC 102 | Australia | Cited for the historical context of equity courts granting monetary remedies to custodial fiduciaries after a preliminary step of accounting. |
| Bank of New Zealand v New Zealand Guardian Trust Co Ltd | High Court | Yes | [1999] 1 NZLR 664 | New Zealand | Cited for the principles relevant to breaches involving an element of infidelity or disloyalty. |
| Parakou Shipping Pte Ltd (in liquidation) v Liu Cheng Chan and others | High Court | Yes | [2017] SGHC 15 | Singapore | Cited for the principle that UWM, being the party dishonestly assisting the primary fiduciary (Woon) in breach in respect of the losses suffered by the plaintiffs, would also be liable to pay equitable compensation for the plaintiffs’ losses caused by the breach of Woon’s duty |
| Novoship (UK) Limited & Ors v Yuri Nikitin & Ors | England and Wales Court of Appeal | Yes | [2014] EWCA Civ 908 | England and Wales | Cited for the principle that there is no need to show a precise causal link between the assistance and the loss; so long as the loss is caused by the breach of fiduciary duty, it will be recoverable from the accessory |
| Townsing Henry George v Jenton Overseas Investment Pte Ltd (in liquidation) | High Court | Yes | [2007] 2 SLR(R) 597 | Singapore | Cited for the principle that the fact that Thia was a director of two separate entities did not entitle him to sacrifice the interest of one for the other |
| Industrial Development Consultants Ltd v Cooley | England and Wales High Court | Yes | [1972] 1 WLR 443 | England and Wales | Cited for the proposition that resignation will not terminate the fiduciary obligations if, but for the resignation, the acts of the director taken in totality would amount to a breach of his obligations of loyalty. |
| Rabiah Bee bte Mohamed Ibrahim v Salem Ibrahim | High Court | Yes | [2007] 2 SLR(R) 655 | Singapore | Cited for the principle that where there is an express or implied contract which is silent on the quantum of remuneration or where there is a contract which states that there should be remuneration but does not fix the quantum, the claim in quantum meruit will be contractual in nature |
| Ng Chee Weng v Lim Jit Ming Bryan and another and another appeal | Court of Appeal | Yes | [2015] 3 SLR 92 | Singapore | Cited for the principle that the Shipbuilding Contract had come to an end after the Suit was commenced (this being a renunciation that would lead a reasonable person to conclude that the plaintiffs no longer intend to be bound by the Shipbuilding Contract |
| Biofuel Industries Pte Ltd v V8 Environmental Pte Ltd and another appeal | Court of Appeal | Yes | [2018] SGCA 28 | Singapore | Cited for the principle that BFI must prove both the fact of damage and its amount. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Partnership Act (Cap 391, 1994 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Joint Venture
- Fiduciary Duty
- Equitable Compensation
- Shipbuilding Contract
- Vessel Construction
- Diversion of Funds
15.2 Keywords
- fiduciary duty
- joint venture
- equitable compensation
- vessel construction
- shipbuilding
- singapore
- construction law
- contract law
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Fiduciary Duties | 95 |
| Chancery and Equity | 90 |
| Breach of Contract | 60 |
| Contract Law | 50 |
| Joint Venture Law | 40 |
| Company Law | 30 |
| Shipbuilding Contracts | 30 |
16. Subjects
- Fiduciary Duty
- Joint Venture
- Construction Law
- Contract Law
- Equitable Remedies