High Court · Decided 3 August 2004

Excel Golf Pte Ltd v Allied Domecq Spirits and Wine (Singapore) Ltd (No 2)

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[2004] SGHC 162Case no. Suit 286/2003

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Laws this judgment relies on

Partnership Act 1890

Grounds of decision

Official text from eLitigation

Lai Siu Chiu J:
Introduction
[1] Excel Golf Pte Ltd (“the plaintiff”) is a company incorporated in Singapore and, according to its objects upon its incorporation in 1985, it deals in computer hardware, software, accessories and office equipment. The objects do not include the staging of major professional golf tournaments, organising of golf-related travel and the sales and distribution of golfing equipment (as the plaintiff subsequently described itself to the public in promotional material.[1] The plaintiff’s managing director is Chuan Ian Campbell (“Chuan”) who is also a shareholder. Chuan has another company called Graham Brash Pte Ltd (“Graham Brash”), which retails books, magazines and stationery. The plaintiff’s biggest shareholder is one Paul Drayson (“Drayson”) who is also a director. Drayson was an accountant before he retired; he prepared budgets for the plaintiff for the subject matter of this trial. Allied Domecq Spirits and Wine (Singapore) Ltd (“the defendant”) is a Singapore-incorporated company. It is a subsidiary of Allied Domecq PLC (“the parent company”), a public company listed in the United Kingdom. The parent company’s world-wide businesses include the manufacture and distribution of spirits and wines and the operation of quick-service restaurants. The parent company owns, amongst others, a brand of Scotch whisky known as “Ballantine’s”, which the defendant markets and distributes in Singapore and in the Asia-Pacific region. The defendant’s regional president is Kenneth Mackay Burnett (“Burnett”).
The facts
[2] Under an undisclosed agreement it had made with the organisers of the Professional Golfers’ Association (“the PGA”) European Tour, the plaintiff was the owner of the annual European Seniors PGA Tour (“EST”) tournament for the years 2002, 2003 and 2004.
[3] In or about June 2001, the defendant’s management conceived the idea of sponsoring a seniors’ golf tournament as a form of promoting Ballantine’s whisky in Asia-Pacific including South Korea, then its biggest market. The defendant decided that its commercial director Nigel Parmley (“Parmley”) would take charge of the project. He was tasked with contacting the European PGA with a view to securing a golf tournament for the defendant to sponsor. Parmley eventually contacted one Andrew Stubbs of EST who put him in touch with one John Hadley (“Hadley”), the partner of EST in Australia and Asia.
[5] Shortly after October 2001, Burnett received a telephone call from Chuan inquiring if it was true that the defendant intended to sponsor a golf tournament. Burnett answered in the affirmative, whereupon Chuan suggested that the plaintiff and the defendant form a partnership to stage the golf tournament. A round of golf followed between them for Burnett and Chuan to discuss the latter’s proposal. At about the same time, IME reverted to Parmley to say the Tuohy proposal was too expensive, although it was a good idea.
[6] According to Chuan, an in-principle agreement was reached after discussions between himself and Burnett on or about 9 October 2001 during their game of golf. The plaintiff would be appointed to organise and manage a golf tournament to be sponsored by the defendant, called Ballantine’s Legends of Golf (“BLOG”), once the parent company gave its approval.
[7] Between November 2001 and February 2002, several meetings took place between representatives of the plaintiff and the defendant. Arising from those discussions, it is common ground that the following terms were agreed:
(a) The defendant would be the title sponsor whilst the plaintiff would organise the BLOG (“the Event”) for three years.
(b) The defendant would pay the plaintiff US$250,000 (“the management fee”) as the management fee for the Event in 2002.
(c) The defendant would underwrite the prize money of US$500,000.
(d) The plaintiff would properly promote and market the Event, including arranging for the appropriate television and media coverage.
[8] The plaintiff disputed the defendant’s pleaded case that the following terms also formed part of the oral agreement:
(a) The parties would work as partners.
(b) The terms for staging the Event in 2003 and 2004 would be agreed only after the Event for 2002 had been held.
(c) The plaintiff would use the management fee to defray the costs involved, including securing a golf course, the fee payable to EST, television coverage and other publicity for the Event, so as to put the Event on EST’s calendar.
(d) The plaintiff would prepare, and regularly update, a detailed budget.
(e) The plaintiff and defendant would contribute financially towards the staging of the Event and share in the profits or losses which might arise.
(f) The plaintiff would procure additional or co-sponsors for the Event so as to minimise the costs charged for staging the Event.
[9] In relation to item (e), the defendant contended that expenses to be borne by the plaintiff (such as the fee payable to EST) would be charged to the plaintiff’s account (“the EG account”), those to be borne by the defendant (such as the management fee) would be charged to the defendant’s account (“the AD account”), while expenses to be borne or shared by both parties would be charged to a common staging account (“the staging account”). Shortfalls in the staging account would first be covered by the plaintiff, but would ultimately be shared between the parties in the ratio 40:60 in favour of the plaintiff and the defendant respectively. Profits would likewise be shared. (Hereinafter, the EG, AD and staging accounts will be referred to collectively as “the three accounts”.)
[11] In January 2002, Chuan introduced Burnett and Parmley to Matthew Murray (“Murray”). Murray is the son of a golf professional and, according to Chuan, was experienced in running golf tournaments; he is a shareholder and director of the plaintiff. Murray was the tournament director for the Event.
[12] Another person who became involved in the Event was Charles O’Connor (“O’Connor”), the self-styled Chief Executive Officer of EventsAsia, which is actually a sole-proprietorship registered at his home address. According to O’Connor, EventsAsia was engaged by the plaintiff to assist with the Event’s management, promotion, media buying and sponsorship sales. I shall return to O’Connor’s role later.
[13] On 4 February 2002, and at subsequent meetings, Parmley and other representatives of the defendant attempted to resolve the terms of the parties’ agreement with Chuan and Matthew. Chuan requested for moneys to start off the Event, specifically the sums of US$50,000 and US$6,000 for the deposits to be paid to the EST and for golf course rental respectively. The defendant paid US$50,000 direct to EST on 8 February 2002. On 18 February 2002, the plaintiff raised an invoice (“the first invoice”) which it described as a deposit towards the management fee. The defendant paid the invoice promptly. A second invoice from the plaintiff followed on 8 April 2002, a third on 11 April 2002, a fourth on 24 April 2002 and the fifth invoice was presented on 21 May 2002. All invoices were for S$50,000 each. The invoices were all paid by the defendant save for the fifth. Eventually, the defendant’s payments totalled US$140,500.97.
[14] Between February and March 2002, Chuan presented the defendant with four draft agreements. However, due to various circumstances, the terms thereof were never finalised. The defendant itself presented the plaintiff with a fifth draft agreement (“the fifth draft”) on or about 15 August 2002, which the plaintiff did not accept. In the event, a formal agreement was never signed between the parties.
[15] Besides meeting to finalise the terms of the formal agreement to be signed between the parties, the plaintiff’s and the defendant’s teams also met frequently for the plaintiff to update the defendant on the status of the preparations for the Event. The Event was to be held between 8 and 10 November 2002 at the Laguna Golf and Country Club (“the venue”). It was to be preceded by two days of Pro-Am (professional and amateur) tournaments on 6 and 7 November 2002.
[16] In the initial months, the parties also met to discuss the press conference scheduled for 23 April 2002 (“the press conference”) to announce the Event. From late March 2002 onwards, minutes of meetings between the parties were prepared by Andrew Benbow (“Andy”), who worked until November 2002 as a consultant for the plaintiff. Benbow[5] also helped on the technical aspects of posting the budgets prepared by Drayson on the plaintiff’s website or e-mailing the same to make them available to all the principal parties, but he did not make decisions on the contents of budgets.[6]
[17] The defendant initially assigned Tham Wai Ming (“Tham”), its financial and commercial controller (who reported to Parmley), to head the working group preparing for the Event. Olivia Sim (“Sim”), the defendant’s communications manager, was another member of the working group. On or about 10 June 2002, Michelle Chan (“Michelle”) was employed by the defendant as marketing manager and was appointed the project manager for the Event.
[18] According to Tham,[7] the defendant did not approve any of the plaintiff’s draft agreements for the following reasons:
(a) The first draft (dated 5 February 2002), inter alia, did not spell out the costs which the plaintiff would bear and it was unclear who would bear the publicity costs, golf course fees and the attendance fees of professional golfers.
(b) The second draft (given to the defendant on or about 18 February 2002), which incorporated amendments made by the plaintiff’s solicitors, did not address the defendant’s concerns, save that it acknowledged the defendant had paid US$50,000 to the EST.
(c) The third draft (given to the defendant on or about 12 March 2002) suffered from the same deficiency as the second. In particular, it did not set out which expenses would be borne by the plaintiff and which by the defendant.
(d) The fourth draft (given to the defendant on or about 27 March 2002) did not incorporate the defendant’s requirement of a detailed budget and did not set out which items of expenditure would come under which of the three accounts.
[19] Sim,[8] Tham and Michelle[9] testified to their unhappiness with the plaintiff’s performance, and its poor and/or inadequate organisation skills, starting with the press conference. This was reflected in the many e-mails they exchanged (particularly from Michelle) with Chuan and others in the plaintiff’s organisation. The following paragraphs highlight some of the incidents that gave rise to the defendant’s dissatisfaction.
[20] For the press conference, Chuan had recommended that the defendant order T-shirts and other items such as umbrellas from a Malaysian company, Swingmart Sdn Bhd (“Swingmart”). The T-shirts, bearing the Event’s logo, were to be worn at the press conference by both parties’ representatives. Swingmart, according to Chuan, was one of the plaintiff’s sponsors.
[22] A sample of the T-shirt with the printed logo was not given to the defendant for prior approval, despite its repeated requests to O’Connor. Sim finally saw the T-shirt on the day of, and just before, the press conference itself. Although the quality was acceptable, Sim opined that the T-shirt could have been better had it been cotton-woven instead of being yarn-dyed.
[23] Sim’s view on the inferior quality of Swingmart’s T-shirt was vindicated as, after the press conference, Chuan himself questioned Swingmart (in an e-mail dated 10 May 2002) on the quality. He commented that the T-shirts, “after a few washes look quite sad”.
[25] Chuan had represented in his letter dated 12 March 2002 to Parmley that Swingmart should be appointed the official apparel company for the Event because it had given an undertaking to make a contribution of 10% on any and all its billings to charity. He repeated the assurance in his e-mail to Tham of 22 April 2002 to prevent her from withholding 10% of the payment due to Swingmart, which she wanted to pass on to the adopted official charity for the Event, namely the Singapore International Foundation (“SIF”). The representation was untrue; there was no such undertaking from Swingmart nor was it ever given to the defendant.
[26] The defendant subsequently ascertained in the process of discovery for this trial that Chuan had made a secret commission out of Swingmart’s appointment. Chuan disclosed reluctantly, pursuant to a court order, an agreement dated 11 April 2002 between the plaintiff and Swingmart, wherein the company agreed to pay the plaintiff 10% commission for business concluded by Swingmart (for the Event) with prospective clients introduced by the plaintiff. In addition, Swingmart agreed to provide complimentary outfits for 12 members of the plaintiff’s staff and would give a 60% discount on purchases of outfits by the plaintiff for its remaining staff. Even worse, the plaintiff agreed to try to secure a higher price of RM32 per T-shirt (up from RM25 per T-shirt), from the defendant.
[27] Swingmart was not an isolated incident. The defendant subsequently discovered that the plaintiff had secured secret commission deals from Hotel Grand Plaza and other organisations. I shall revert to this topic later.
[28] Another criticism levelled against the plaintiff related to the press release it prepared for the press conference. The press release announced that part of the Event’s proceeds would go to local charities, including the Association of Women for Action and Research, instead of the SIF. Sim pointed the mistake out to Murray and Chuan who dismissed it cursorily. It transpired that the plaintiff and Murray had furnished the Asian PGA with the wrong draft for the press release, which was then placed on the PGA’s website.
[29] Yet another aspect on which the plaintiff fell short of the defendant’s expectations related to its design of the stage backdrop for the press conference. Sim said Murray’s logos for the plaintiff, EST and Asian PGA appeared to be a “cut and paste” job extracted from the internet websites of the three organisations. The defendant engaged its own creative agency, DPC Design Pte Ltd, to do the design. The designers rejected Murray’s logos outright, even after his improvements, and proceeded to design the artwork themselves so as to achieve a more professional finish.
[30] Publicity under O’Connor’s charge was another source of dissatisfaction to the defendant. Matters did not improve when Chuan brought in Gartshore & Associates Advertising Pte Ltd in August 2002, as the promotion and media consultant. The company’s managing director and chairman William Gartshore (“Gartshore”) met the defendant’s representatives on 14 August 2002 and proposed advertising slots in various printed media as well as a lucky draw contest. When Gartshore[11] was told that the plaintiff had allocated a budget of US$35,000 for advertising for the Event, he was visibly surprised. He opined, and confirmed under cross-examination,[12] that such a sum would only be sufficient to buy two full pages of advertisements in The Straits Times newspaper. According to the defendant, neither O’Connor nor the plaintiff finalised a feasible publicity plan, even after the defendant agreed to “top up” the much-reduced advertising budget by US$15,000 to US$50,000.
[31] As for the lucky draw contest mooted by Gartshore, the defendant received a mock-up of a lucky draw contest advertisement from the plaintiff in mid-September 2002. Michelle ascertained from inquiries she made of the Criminal Investigation Department (“CID”) that government approval was needed to conduct the contest. She requested a copy of CID’s permit from the plaintiff but never received its response.
[32] In May 2002, O’Connor proposed that a Great Golf Sale (“GSS”) be held at the venue simultaneously with the Event. Chuan informed the defendant that the GSS would be staged by a business associate of his, one Zainal Shah of Super Shows Asia Pte Ltd (“Super Shows”). Further, 20% of the gross sales generated at the GSS would go to the staging account. Michelle repeatedly requested, but never received, a copy of the agreement between the plaintiff and Zainal Shah or Super Shows from the plaintiff. It was only in the discovery process for this trial that the defendant obtained a copy of the plaintiff’s agreement, evidenced in a letter dated 1 September 2002 with Zainal Shah/Super Shows. It was stated therein that the plaintiff would be offered a 25% share in Super Shows in exchange for the latter being given the first right of refusal to hold similar sales at other golf tournaments organised by the plaintiff. Super Shows also agreed to pay the plaintiff a 10% commission on the net sales or billings of exhibitors participating in the GSS, and 20% of all income generated by novelty items such as “hole-in-one” charity golf and putting competitions held in conjunction with the Event.
[33] The above instances of the defendant’s dissatisfaction with the plaintiff’s organisational abilities pale in comparison with its unhappiness over the lack of and/or inadequate budgets from the plaintiff. The continuing dispute surrounding the budgets was ultimately the proverbial last straw that led the defendant to terminate the agreement with the plaintiff and to cancel the Event.
The budgets
[34] The defendant contended that it was part of the terms of the oral agreement that the plaintiff would provide detailed and updated budgets periodically. The plaintiff denied this. The defendant alleged that it (particularly Tham) chased the plaintiff repeatedly for budgets since 7 May 2002, including details of actual expenses incurred and profit and loss accounts.
[35] In her testimony, Tham referred to the minutes of meetings such as those held on 30 May 2002 (which she drafted) and 26 July 2002 (recorded by Andy) as proof of the plaintiff’s obligation. She deposed that Chuan had explained at the first meeting on 15 March 2002 that expenses would be categorised under one of the three accounts, depending on their nature. However, he did not elaborate on which specific items would come under which account. Consequently, Tham requested that the plaintiff prepare a detailed budget with full particulars, and that it amend the third draft agreement accordingly to reflect the defendant’s requirement. The defendant’s request was met by the plaintiff’s inclusion of the following clause in the fourth draft:
[39] In a meeting on 30 May 2002 and in subsequent meetings and correspondence, Tham and her colleagues expressed the defendant’s concern that the budget of 6 May 2002 was not detailed enough. Chuan promised that the plaintiff would clarify the budget, set out the actual expenditure incurred and prepare an updated profit and loss statement. The defendant requested that the budget be split into the three accounts showing expenses already incurred and projected expenditure. All income received from sponsorship and other sources should be placed in the staging account.
[40] However, as at 4 July 2002, when the defendant received the plaintiff’s fourth invoice dated 21 May 2002, the plaintiff had still not provided the defendant with a detailed budget to enable it to assess the financial health of the Event. Neither did the plaintiff appear to have secured any reasonable amount of sponsorship income. Consequently, the defendant decided not to pay the plaintiff’s fourth invoice. Despite Tham’s e-mail reminder to Chuan’s secretary Evelyn on 10 July 2002, Chuan did not provide an updated budget. Instead, he replied that the parties were at an impasse, and that if the defendant continued to withhold payment, the plaintiff was less compelled to provide updates or further information.
[42] There was no response from the plaintiff to the letter. Consequently, Michelle and Lim sent a reminder dated 25 July 2002 on the defendant’s behalf. Chuan replied on 26 July 2002, addressing not the budget concerns but other irrelevant issues. He then claimed that the information sought by the defendant had been disclosed to them on the BLOG management document website and at numerous meetings which he enumerated. The defendant was puzzled; if indeed it had the information, it would not have asked for the information in the first place. Chuan added that the Event had been publicised, and promotions and media coverage had been organised and would be carried out within the next three and a half months. This surprised the defendant as it had not seen any promotional or media publicity plan, nor was it given any such information. Lastly, Chuan claimed that there was a contract dated 19 July 2002 (not explained) which was binding on the defendant.
[44] Given the significant reduction in the figures from those in the 6 May 2002 budget, Lim and Tham raised their concerns to Chuan as to how the quality of the Event could be assured. Tham expressed doubt on whether the plaintiff could meet its financial obligations, given its recent inability to pay a deposit of US$7,500 required to secure the services of a professional golfer, Isao Aoki. Further, the plaintiff’s paid-up capital was only S$2.
[45] At the meeting, Lim also sought clarification of the role of O’Connor or EventsAsia, previously described by Chuan as an “outside contractor”. It was then that Chuan admitted O’Connor was part of the plaintiff’s staff. He agreed the fees of EventsAsia would be transferred from the staging account to the EG account. The plaintiff then agreed to supply, by 12 noon of 31 July 2002, another budget which showed expenses incurred, income received and an analysis of the projected expenditure and income, for the three accounts. It also agreed to provide an explanation on why the budget had increasingly shrunk and how the quality of the Event could nonetheless still be maintained.
[47] The plaintiff and the defendant gave different versions of the minutes of the meeting of 26 July 2002. When he testified, Lim[14] explained[15] that he had found several inaccuracies in Andy’s draft minutes received on 29 July 2002. Hence, he e-mailed Andy immediately to say that he had several amendments and additions to make to the minutes. Lim discussed his proposed amendments with his colleagues between late July and early August 2002. Unfortunately, the issue then slipped his mind as he was preoccupied with his own work and with the fifth draft. He only remembered on or about 27 September 2002 when he was clearing his e-mail. He then forwarded his version of the minutes to Andy. I should emphasise that the dispute on the minutes centred mainly on the appearance fee. Lim’s version of the minutes recorded:
and had the following additional paragraph:
On the other hand, Andy’s version stated:
and omitted entirely the italicised paragraph set out above. I should add that Chuan objected to the defendant’s version of the minutes on 17 October 2002 after the defendant had terminated the plaintiff’s services, while Drayson’s recollection[16] of what transpired at the meeting seemed to suggest Lim’s version was correct.
[48] When he was cross-examined,[17] Andy[18] had no recollection of Lim’s e-mail to him giving notice of proposed changes to the minutes. Questioned by the court,[19] Andy testified that he generally prepared minutes of meetings without consulting or relying on anyone. This was the case for the minutes of the meeting of 26 July 2002.
[50] Consequently, after Tham had discussed the 31 July budget with him, Lim e-mailed Andy on the very same day pointing out that the 31 July budget contained figures that differed from earlier budgets. He also pointed out that the budget change explanation served no purpose as the numbers did not reconcile with the figures in the 31 July budget. It also did not break down the expenses between the three accounts, and sponsorship details were still lacking.
[51] Lim’s e-mail drew a curt response on 1 August 2002 from Chuan; he stated he would not provide the budget, the plaintiff had never agreed to provide the information requested, and Andy would meet the defendant the following day. The plaintiff’s volte face surprised the defendant.
[52] On 2 August 2002, Parmley, Lim, Tham, Sim and Michelle met Andy and Drayson; Chuan was absent. The defendant’s team queried the 31 July budget, and asked why the fees of Nutrius/Hadley and EventsAsia had been placed in the staging account. As they had been hired to perform the plaintiff’s tasks, their fees should rightly be paid from the EG account, as was agreed previously. Drayson and Andy said that they could not recall such an agreement and refused to transfer the items to the EG account. Parmley questioned the sponsorship income. He stressed the need for an accurate record in the budget of such sponsorship so that there was an accurate reflection of the financial impact on the budget. It was agreed that the parties would meet again to discuss the question of sponsorship and for each side to evaluate its financial risks.
[53] On 13 August 2002, Chuan e-mailed the defendant a sponsorship update. The defendant did not find it useful because it again did not include details of sponsorship and there was no supporting documentation by way of contracts or letters of intent.
[55] By this time, according to Tham, the defendant was becoming increasingly frustrated with the plaintiff. None of the plaintiff’s budgets indicated when sponsors’ money would be coming in and how the sums would be utilised. Further, items were being constantly shifted from the EG account to the staging account. From the dearth of sponsorship details, it appeared that the plaintiff had been unable to secure any or adequate sponsorship to fund the Event. That would mean that the defendant would ultimately have to bear the entire loss arising therefrom, given the plaintiff’s inability at the time to pay for many of the items in the staging account and its S$2 paid up capital.
[56] It was these concerns that prompted Lim to forward to the parent company the plaintiff’s fourth draft of the agreement. The parent company amended the document by way of the fifth draft, which Lim e-mailed to the plaintiff on or about 15 August 2002. Given the state of the parties’ relationship, it was not surprising that the fifth draft included the following new clause:
The above and other amendments proposed by the defendant were meant to address the recurring problems it had encountered with the plaintiff.
[57] Michelle indicated to Chuan on 16 August 2002 that the defendant wanted a signed contract by the time of the next meeting (20 August 2002). Chuan responded on 20 August 2002 to say an agreement was already in place which the plaintiff would sign but, not the fifth draft. He again asked for payment of US$100,000.
[58] The meeting on 20 August 2002 did not resolve any of the outstanding issues as, according to the defendant, Chuan stormed out of the meeting after refusing to discuss the fifth draft. Despite his outburst, the defendant subsequently attempted to discuss the amendments incorporated in the fifth draft with Chuan. However, Chuan was adamant that an agreement was already in place and refused to negotiate further.
The termination
[59] By end-September 2002, the plaintiff had still not addressed the defendant’s long-standing concerns vis-à-vis the budget and sponsorship. Neither had the plaintiff come up with a comprehensive publicity plan despite the lapse of time. Consequently, the defendant decided to, and did, seek legal advice on what it considered were material breaches by the plaintiff of the oral agreement.
[60] By their letter dated 30 September 2002 (“the notice”) the defendant’s solicitors informed the plaintiff that it was in repudiatory breach of the oral agreement between the parties for the following reasons:
(a) A complete lack of transparency on the plaintiff’s part in accounting for the income earned and the expenses incurred in staging the Event, in relation to the staging account.
(b) A total failure on the plaintiff’s part to account for receipts from any co-sponsors.
(c) Despite the Event being less than six weeks away, a finalised budget had not been agreed between the parties due to the plaintiff’s constant reductions of the size of the budget and failure to find co-sponsors.
(d) A significant lack of promotional publicity for the Event since the press conference on 23 April 2002.
[61] The notice concluded with an offer to the plaintiff to remedy its breaches by putting forward constructive proposals acceptable to the defendant at a meeting to be held between the parties no later than 2 October 2002. Further, the parties were to sign a written contract by the same deadline. Failing compliance with both requirements, the defendant’s solicitors gave notice that the defendant would terminate the oral agreement in accordance with its full legal rights.
[63] On the morning of 2 October 2002, Parmley replied to Andy setting out the issues pertaining to performance criteria required by the defendant. He proposed that if the performance criteria was not met, either party could withdraw without penalty. However, if the criteria was met, a penalty of US$100,000 would be imposed on the party withdrawing.
[64] Another meeting followed that day between the parties. However before the meeting began, Chuan demanded that Michelle and Lim leave, which they did. Parmley felt that the 1 October budget was useless as only the expenses portion was shown. The defendant assumed therefrom that the Event would face a potential loss of about US$600,000. Chuan was confident the loss would only approximate US$100,000, which estimate the defendant felt was unrealistic. Parmley and Cowie told Chuan that if the Event proceeded, the defendant would only agree to hold it in 2002 and decide later whether to hold it in 2003 and 2004. Chuan however was adamant that there was a contract for three years in place, and that the defendant could not walk away after one year.
[65] After the meeting, Chuan reiterated his stand; he informed the defendant that it had to compensate the plaintiff if the contract was only for 2002. At this stage, according to Parmley, the defendant realised that the plaintiff was more interested in money than in salvaging the situation. It decided to terminate the defendant’s relationship with the plaintiff.
[66] Consequently, the defendant’s solicitors wrote to the plaintiff’s solicitors on 3 October 2002 (“the termination letter”) stating that the defendant had not received any acceptable constructive proposals on how the repudiatory breaches of the plaintiff would be remedied. As such, the defendant accepted the plaintiff’s breaches and was terminating the agreement forthwith. The defendant reserved its rights to claim damages arising from the repudiatory breaches and to recover all sums paid in good faith to the plaintiff. I should add that on or about 7 November 2002, the defendant stopped payment on its cheque dated 23 September 2002 for S$49,950 issued in favour of the venue. The payment had been advanced on the plaintiff’s behalf and was to be set off against the management fee.
[67] Notwithstanding the cancellation of the Event, the defendant agreed to and did reimburse several golf professionals at the request of Andy Stubbs of the EST a total sum of S$32,051.56 for non-refundable deposits the players had paid to book air-tickets to Singapore. The defendant paid these and other expenses of the EST as it wanted to maintain friendly relations with PGA and EST, with whom it hoped to work in the future.
[68] The defendant also participated in the Ballantine’s Charity Golf Challenge (“the Charity Event”) organised by the SIF that was scheduled for, and was held, on 11 October 2002 in aid of the SIF at the Jurong Country Club. According to Cowie,[20] the Charity Event was separate and distinct from the Event; it was for a good cause, the guest-of-honour was a government minister, guests had been invited and the defendant was the sponsor.[21]
[69] Despite the termination letter, the plaintiff still attempted between 3 and 12 October 2002 to finalise the terms of the formal agreement. Chuan e-mailed yet another draft (marked “private and confidential - without prejudice”) to the defendant on 12 October 2002 and even apologised to the defendant (particularly to Michelle and Lim) for his past conduct if he had caused them offence. The plaintiff’s solicitors replied to the termination letter on 10 October 2002[22] vehemently denying their client was in repudiatory breach of the agreement.
[70] On 16 October 2002, the plaintiff issued a press release drafted by Murray announcing not the cancellation but the postponement of the Event to mid-2003 “due to certain timing issues and recent events and developments beyond the control of the organisers”. I consider the press release highly misleading. Questioned by the court, Chuan[23] admitted the defendant had not agreed with him to postpone the Event to April 2003. Even so, he would not admit that the press release was untrue; he claimed it was “inaccurate”.
The pleadings
[71] On 23 March 2003 this suit was filed. In the statement of claim, the plaintiff alleged that it had exclusive naming rights to the Event for three years by reason of an oral agreement made with the defendant on or about 4 February 2002. It alleged that it also had a written agreement with the defendant evidenced in:
[72] Over and above the terms set out in [7] above, the plaintiff alleged that the following terms, inter alia, were also agreed:
(a) For staging the Event in 2003 and 2004, the plaintiff would be at liberty to raise the management fee by 25% per annum.
(b) The plaintiff would use its best endeavours to promote the defendant’s involvement in the marketing of, and advertisements and materials published for, the Event by the plaintiff.
[73] The plaintiff alleged that the defendant’s conduct and correspondence (which were particularised) amounted to part-performance of the four unsigned agreements, upon which the plaintiff had acted to its detriment. However, by the defendant’s letters (inter alia those dated 25 and 30 September 2002) and by the defendant’s conduct, the plaintiff alleged the defendant either denied and/or evinced an intention to be no longer bound by the unsigned agreements. The plaintiff stated it accepted the defendant’s repudiation of the unsigned agreements by the issue and service of the writ in these proceedings.
[74] The plaintiff pleaded that the defendant’s breach had caused its principal officers (including Chuan) and consultants (including Hadley) to lose credibility with the PGA, and with top executives and government leaders in Singapore and worldwide. It claimed damages which included management fees of US$312,500 and US$390,625 for the years 2003 and 2004 respectively, the annual prize money totalling US$1.5m for three years, expenses of S$288,787.51 which it had allegedly incurred in preparation of the Event, loss of profits for three years, loss of reputation and aggravated damages.
[75] In its defence, the defendant referred to and relied on the oral agreement set out in [7] and [8] above. It:
(a) denied that the four unsigned agreements were binding upon the parties;
(b) denied that it had agreed to the Event being held for three years and disputed the fees claimed by the plaintiff for 2003 and 2004;
(c) averred that it had paid a total of US$140,500.97 to the plaintiff in good faith towards payment of the management fee;
(d) averred that it had become increasingly apparent, in the course of the defendant’s dealings with the plaintiff between February and September 2002, that the plaintiff had failed and/or was not able and/or was not willing to perform its obligations under the oral agreement; and
(e) alleged that the defendant had consistently failed to discharge its obligation to prepare and update budgets covering the three accounts. Budgets that were presented contained figures that were constantly reduced and/or changed. The plaintiff failed to provide a proper system of accounting causing the defendant to doubt the standard and quality of the Event. This directly affected the goodwill and brand name of Ballantine’s, given that the defendant was the title sponsor.
[77] The defendant alleged that the promotional plan that O’Connor presented to it on 29 July 2002 was vague, while timelines and milestones were absent. Despite requests from Sim for explanations of the promotional plan, none were forthcoming as of September 2002, notwithstanding Chuan’s assurances.
[78] The lack of co-sponsorships was another grievance of the defendant. It alleged that, at various times, the plaintiff had represented that there were confirmed sponsors which included Hardy’s Wines, Asprey & Garrard, Srixon, Evian/Danone, Swingmart, Plaza (Pacific) Hotels, Singapore Petroleum, Keppel Corporation, Singapore Airlines, Pauliner-Melchers, Tait Radio Comunications, Steelcase, The Economist and the Singapore Sports Council (“SSC”). The plaintiff did not and/or could not produce agreements and/or written undertakings to the defendant from any of these alleged sponsors.
[79] The defendant alleged that it was the plaintiff who was in repudiatory breach of the oral agreement for failing to comply with the terms by mid-September 2002. It relied on the notice and the termination letter. The defendant counterclaimed damages from the plaintiff as well as S$449,510.37. This sum included periodic payments made towards the management fee as well as expenses incurred for the press conference, payments to Swingmart and the reimbursement to EST of various expenses incurred by or on behalf of professional golfers.
[80] The plaintiff filed a lengthy (48-page) reply and defence to the counterclaim essentially denying the defendant’s allegations. It asserted[24] that the parties had arrived at a detailed and focused agreement expressed in the first unsigned draft and that no further negotiations were required. The plaintiff further contended that it was not obliged to furnish the defendant with budgets but did so as a matter of courtesy. It averred it did not have to account to the defendant for how it expended the management fee. Incidentally, nine sets of further and better particulars of their respective pleadings were filed by the parties, sometimes voluntarily, at other times pursuant to orders of court. In one instance, the plaintiff filed a registrar’s appeal on particulars ordered from them.
The evidence
[81] The trial was spread over 16 days and the parties had eight witnesses each. Surprisingly, although he was the plaintiff’s principal witness, Chuan’s written testimony was contained in brief paragraphs that basically rehashed the plaintiff’s statement of claim. He chose to rely instead on the voluminous documents (13 bundles) exhibited to his affidavit. The result was that he subjected himself to rigorous cross-examination for over a week. Chuan’s brief written testimony, as well as that of plaintiff’s other witnesses, is to be contrasted with the affidavit evidence of the defendant’s witnesses, which dealt in extenso with the facts leading up to the termination of the agreement and the cancellation of the Event. I shall now address the issues that arise from the pleadings.
Was any contract concluded by the unsigned draft agreements? If not, was there an oral agreement between the parties?
[82] Chuan repeatedly maintained that a firm agreement was in place by 6 February 2002, based on the first draft and that the plaintiff’s subsequent three drafts were “clarifications and/or cosmetic changes against which the defendants made payment and performed indicating their agreement”.[25]
[83] However, Chuan’s answers during cross-examination showed that the plaintiff’s stand was unsustainable. First, the minutes of the meeting drafted by the plaintiff held on 4 February 2002 did not record that the defendant had agreed to the first draft agreement. In fact, under item 9.1 headed “Steps to be taken”, it was stated “Letter of intent with Ballantines”. According to Parmley,[26] the defendant initially wanted a memorandum of understanding or a letter of intent but it was never done.
[84] From the correspondence and e-mails before the court, it was clear that the defendant continuously raised queries or proposed amendments to the plaintiff’s various drafts. Cross-examined, Chuan did not dispute that such queries came from the defendant.[27] Indeed, in his e-mail of 27 March 2002 forwarding the fourth draft to the defendant, Chuan said “it incorporates the few changes we discussed at March 15th Meeting”. Whether the changes were few or many does not detract from the fact that revisions were made to the many drafts. By no stretch of the imagination can the revisions be described as “clarifications”.
[85] I have already observed at [69] that after the defendant terminated their relationship, the plaintiff sent further drafts to the defendant for approval, the terms of which contradicted the plaintiff’s claim that there was a three-year agreement in effect. Why agree to a one-year term (albeit on terms) if there was already a three-year agreement in effect? Even more telling was the plaintiff’s reaction to the fifth draft. The minutes of the meeting held on 20 August 2002[28] recorded Chuan as having opined (when Lim asked the plaintiff to sign a new agreement which included amendments made by the defendant) that the new agreement should not be a topic for discussion at the status meeting and was best dealt with in a face-to-face meeting with Parmley and himself at a later date. Such actions are inconsistent with the plaintiff’s position that a concluded agreement was already in existence by 6 February or even by 27 March 2002 when the fourth draft was forwarded to the defendant. Further, there was an e-mail from O’Connor to Chuan dated 3 July 2002[29] where he asked Chuan to check, when the defendant had signed the contract, whether the defendant was committed to three years. In the e-mail, O’Connor expressed his fears that the defendant wanted information on sponsors’ contracts “so they can replicate the event in 2003”. It clearly showed that, internally, the plaintiff did not regard itself as having secured a signed contract, let alone for three years.
[86] The testimony of Murray[30] reinforced the defendant’s stand that there were on-going discussions between the parties on the various draft agreements even up to 3 October 2002, although he described the situation as “bizarre”.[31]
[87] The defendant’s witnesses, Tham and Parmley, testified that in the period before 23 April 2002 they were pre-occupied with the press conference. Hence, finalising the terms of and signing an agreement was not a priority. In any case, the defendant considered there was already an oral agreement in existence.
[88] The defendant submitted that its periodic payments towards the management fee should not lead to the conclusion that the four drafts were binding on the parties as there was no dispute between the parties that the management fee was payable. Parmley[32] and Burnett[33] testified that the payments were made in good faith.
[89] In its submissions,[34] the defendant relied on extracts from Chitty on Contracts (28th Ed, 1999) vol 1, in particular on the following passages at paras 2-103 and 2-104 to support its contention that there was only an oral agreement between the parties:
[90] For its defence that the oral agreement between the parties was for one, not three, years, the defendant also referred to two another extracts from Chitty at paras 2-116, 2-118 and 2-119 which state:
Cowie’s re-examination in this context is highly relevant. He explained[35] that although the defendant’s intention was to have a three-year contract, unless the Event for 2002 was successful the defendant did not want to be obligated to proceed with two more unsuccessful Events as it would not make commercial sense. The defendant also relied on two essential terms which the parties had not agreed on for years 2003 and 2004 – the venue for the Event and the plaintiff’s management fees. Hence, it only had an agreement in principle for years 2003 and 2004 which, based on the above extract from Chitty at para 2-103, meant that it was unenforceable.
[91] On the evidence before the court and on basic contract law, there is little doubt that the contract between the parties was only oral, it was not contained in the four draft agreements of the plaintiff and it was for only one year as terms for the contracts for the second and third years were still under negotiation.
Were there other terms of the oral agreement between the parties apart from the four undisputed items?
Proper accounting and the budget
[92] Turning now to the disputed terms of the oral agreement, I deal first with whether the plaintiff had agreed to provide a proper system of accounting and budgets. Chuan consistently denied that the plaintiff had any such obligation, claiming budgets were provided to the defendant as a matter of courtesy, not as of right.
[93] Earlier at [35]–[50], I referred to the e-mails and the minutes of meetings where the defendant (in particular Tham and Lim) repeatedly chased the plaintiff for comprehensive and updated budgets, pertaining especially to the staging and EG accounts. It is noteworthy that the disputed minutes of the meeting on 26 July 2002 had “budget” as an undisputed item of discussion, and it recorded that the plaintiff had presented an updated budget and that it had agreed to supply:
(a) cash flows for the three accounts;
(b) an analysis of cash flows (sponsors and the likelihood of payment) spread over the August through December period; and
(c) a description of how changes in expense levels were derived and how the quality of the resulting tournament would be maintained.
[94] If indeed the plaintiff’s contention is to be believed, one wonders why it did not inform the defendant at that meeting, or earlier or even later, that the plaintiff was under no obligation to provide any budgets at all. On the contrary, the plaintiff continuously came up with new or revised budgets in an attempt to comply with the defendant’s insistence on details of income and expenditure. At no time before Chuan’s volte face on 1 August 2002 did the plaintiff deny or refuse the defendant’s requests for budgets and supporting documentation, although it consistently procrastinated in its compliance. Consequently, I am satisfied that the plaintiff was obliged to provide detailed budgets and update the figures periodically for the three accounts so that the defendant could be apprised of its financial risks involved for the Event.
Was there a partnership between the parties?
[95] Whether the plaintiff had to account to the defendant on expenditure of the management fee is tied up with the question of whether the parties were partners. Despite the plaintiff’s denials that there was a partnership, Chuan himself referred to the parties as partners or as having a partnership in his letter dated 12 June 2002 to Parmley and in his e-mail to Michelle dated 27 June 2002. I reject his denial based on clause F of the recital in the draft agreements and on cll 1.2 and 1.3 of the fourth draft agreement as it went against the entire tenor of the parties’ relationship and contradicted the plaintiff’s reply and defence to counterclaim where it was pleaded[36] that there was to be a profit-sharing arrangement.
[96] Clause F in the four drafts states:
The relevant extract from cl 1.3 from the fourth draft reads:
[97] In its final submissions[37] the defendant offered an explanation for Chuan’s change in stance. He must have realised albeit late in the day, that the drafts provided for the sharing of profits not losses, between the parties. The sudden shift in the plaintiff’s position, however, did not advance its case that it was not the defendant’s partner. The parties had a profit-sharing arrangement and a staging bank account was opened, according to Chuan after considerable probing, on 4 October 2002 (not September 2002 as he had initially claimed). In cross-examination, Chuan[38] withdrew para 9.25 of the plaintiff’s reply where it was asserted that it was not obliged to open a staging bank account. Why would the plaintiff open a staging bank account especially after the notice of termination, if indeed there was to be no sharing of profits and losses?
[98] Sharing of profits is the hallmark of a partnership. Section 1(1) of the Partnership Act (Cap 391, 1994 Rev Ed) (“the Act”) states:
Granted the parties were not in business together, but that did not mean they did not or could not agree to participate as partners in a one-off venture, namely the Event.
[99] In this regard, I turn to the authoritative textbook Lindley & Banks on Partnership (18th Ed, 2002) where at para 7-16 the author quoted Lord Lindley as saying:
As to the evidence on what has to be proved, the author added at para 7-19:
I am therefore satisfied that the defendant had a partnership arrangement with the plaintiff for the staging of the Event.
Was the management fee to be used to defray expenses for the Event?
[100] The management fee, which is equivalent to S$425,000 at an exchange rate of S$1.70 to US$1.00, is not a small sum; neither is the prize money. Averaged over 12 months, the monthly fee equated to US$20,833.33. I cannot imagine that the defendant, as a commercial enterprise, would give a carte blanche to the plaintiff on payments it made towards the management fee.
[101] In any case, in the light of my finding that there was a partnership between the parties, until the plaintiff actually “earned” the management fee by staging the Event, it was obliged to account to the defendant for moneys paid by the latter. In this connection, I refer again to Lindley & Banks on Partnership where at para 16-01 the learned author states:
In addition, s 28 of the Act puts a duty on the plaintiff “to render true accounts and full information of all things affecting the partnership to any partner or his legal representative”. It was precisely because of the need for accountability that the staging account was established. This fact was not and could not be denied by the plaintiff. Consequently, the plaintiff was obliged to account to the defendant on how it expended the sums paid towards the management fee. I accept the testimony of the defendant’s witnesses Parmley and Cowie in this regard. The defendant’s periodic payments were to assist the plaintiff to pay for television coverage, media publicity and other promotional expenses relating to and leading up to the Event, hence the defendant’s insistence on proper budgets to establish how its moneys were spent.
Was the plaintiff obliged to procure additional sponsors for the Event?
[102] The plaintiff’s case was based on the four draft agreements. It cannot therefore blow hot and cold, as the fourth draft contained the following clause:
[103] Throughout, the minutes of meetings and e-mail correspondence showed that the plaintiff repeatedly promised the defendant sponsorship particulars, but failed to come up with them. The reason for the plaintiff’s reluctance is now obvious. It would also explain why (according to Cowie’s written testimony which the plaintiff did not challenge), at the meeting on 1 October 2002 Chuan said that the plaintiff would allow the defendant to see the sponsorship contracts only after the parties had executed a written contract. This was either because Chuan had signed contracts with sponsors who agreed to pay the plaintiff commission, or because the plaintiff never had the sponsors it claimed to have secured. Chuan wanted to tie the defendant down so that even if it found out about his misfeasance or omission later, it would be too late for the defendant to withdraw from the Event (or so he believed).
[104] During cross-examination, Chuan took the court on a semantic merry-go-round with his convoluted verbiage regarding “confirmed sponsorship”. This can be seen from the following extracts from the notes of evidence:[39]
[105] Chuan’s confusing answers should be contrasted with:
(a) his solicitors’ letter dated 10 October 2002[40] to the defendant’s solicitors which, inter alia, stated that the plaintiff received the first sponsorship income of S$40,000 from Grand Plaza Hotel on 26 September 2202 and at that point in time, no other sponsor had been contracted with nor consideration received and all arrangements were still in the final stages of negotiations; and
(b) para 31.14 of the reply and defence to counterclaim where the plaintiff pleaded that, although not contractually obliged to, the plaintiff as a matter of courtesy furnished information on sponsorship. The paragraph added, “All corporations named by the defendant had indicated sponsorship participation, and signed agreement do exist between the plaintiff and the name companies with the exception of Pauliner-Melchers who were to provide and wished appointment as the Event’s Official Beer, and the SSC who provided verbal and emailed indication of their intend [sic] co-sponsorship.”
In regard to (a), Chuan could only proffer a lame explanation that his solicitors were wrong. I should add that the defendant’s solicitors wrote to the SSC on 16 January 2004. The latter’s solicitors confirmed on 20 January 2004[41] that SSC did not enter into any contract with the plaintiff whether orally or in writing. Although there were discussions, nothing was ever concluded. SSC’s position would have been known to Chuan as it sent him an e-mail on 11 September 2002[42] setting out a tentative proposal for sponsorship qualified with the remark “this is not a formal offer”. The lack of supporting evidence also disproved his claim that there was a firm commitment from CNN as at 20 September 2002 and with other alleged sponsors including, inter alia, BMW and Tradewinds Tours & Travel Pte Ltd (a subsidiary of Singapore Airlines).
[107] Earlier at [26]–[27], I referred to such secret commission arrangements made by Chuan at the defendant’s expense. This also extended to O’Connor’s appointment. In discovery, the defendant was given an agreement dated 15 March 2002[44] signed by the plaintiff with EventsAsia where, in return for a payment of S$250,000 by 1 January 2004, O’Connor agreed to allow the plaintiff to purchase 30% equity in his sole-proprietorship. Amongst the documents produced in court were invoices issued by O’Connor to the plaintiff,[45] of S$3,000 per week or S$12,000 per month. Hadley, on his part, charged the plaintiff US$2,083 per month.[46] It is no wonder Chuan tried to make the defendant pay for O’Connor’s and Hadley’s consultancy fees by moving the items from the EG account to the staging account. Had he succeeded, it would have meant the plaintiff reaping the benefit of its agreements with Nutrius and EventsAsia. I found Chuan’s explanation that he “was remiss in addressing the document”[47] when confronted with the Nutrius agreement totally unconvincing. Like the contracts with Swing, Hotel Grand Plaza and Super Shows, Chuan would not have disclosed this agreement to the defendant without a court order. O’Connor’s cosy deal with the plaintiff would also explain why Chuan rejected the defendant’s request to engage the services of Fulford Public Relations Consultancy Pte Ltd (“Fulford”) to prepare a public relations proposal to generate publicity for the Event.
[108] As for Hotel Grand Plaza, apart from the cash component of $40,000, the plaintiff’s solicitors’ letter dated 10 October 2002 to the defendant’s solicitors did not disclose that the plaintiff had secured a “barter” arrangement. Obtained in discovery, the plaintiff’s letter dated 20 August 2002[48] to Plaza Pacific Hotels & Resorts (owners and/or operators of Hotel Grand Plaza) revealed a “sponsorship investment value” of S$125,000 on the package of rooms, food and beverages to be provided by the hotel. The shortfall of S$16,829 between the sponsored value (S$125,000) and the actual value (S$108,171) of the package was given to the plaintiff by way of complimentary rooms, a Christmas party and other benefits. In its letter, the plaintiff promptly gave notice that it intended to utilise its benefits by accommodating Hadley at Grand Plaza Hotel between 25 August and 4 September 2002. In addition, the plaintiff stated that it expected to earn 10% commission on room nights that it generated for stays at any of the Plaza Pacific Hotels and at the Mandarin Hotel and from associated tours. It is little wonder that the plaintiff objected to the defendant’s attempts to book accommodation at the Grand Copthorne Hotel for participants of the Event.
Did the plaintiff fail to provide sufficient and appropriate publicity and media coverage for the Event?
[109] The plaintiff did not deny it had an obligation to promote and publicise the Event, but maintained it had discharged its responsibility. There are two aspects to this issue: first, what was the defendant’s target audience in promoting Ballantine’s for the Event and was it made known to the plaintiff? Secondly, was there sufficient publicity generated by the plaintiff for the Event before the termination letter?
[110] In his affidavit of evidence-in-chief, O’Connor[49] deposed:
The above statements were proved to be untrue when Chuan, O’Connor and the defendant’s witnesses testified.
[111] In paras 100–101 of her written testimony, Sim deposed that:
[112] Sim testified[50] that she had informed the plaintiff of the defendant’s target audience in a meeting in February 2002. It was not documented as Andy had yet to join the plaintiff and there was no established minute-taking procedure in those days. Sim recalled she had briefed the plaintiff (as well as Michelle after Michelle joined the company), that the defendant wanted to leverage on the Event to promote the 17 Years Old and limited edition (30 Years Old) aged Ballantine’s, that the target consumers were predominantly men who were in their late 40s and upwards, who were in established positions and whose lifestyles included playing golf. In this regard, Sim had passed a book titled The Scotch – The Story of Ballantine’s 17 Years Old to Murray.[51]
[113] Cross-examined, she disagreed with counsel’s suggestion that the defendant itself did not know and did not inform the plaintiff what publicity it wanted, commensurate with the prize money of US$500,000. Extracts[52] from The Scotch book appeared in O’Connor’s write-up[53] for the lead-up tournaments to the Event. He had incorporated the following excerpts from the book into his introductory paragraphs:
This contradicted the plaintiff’s claim that it was not briefed on what the defendant’s target and market audiences were.
[114] It should be noted that in a letter dated 19 July 2002 to the plaintiff, the defendant had placed on record that since the press conference there had been an absence of publicity. It expressed its concerns and added:[54]

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Excel Golf Pte Ltd v Allied Domecq Spirits and Wine (Singapore) Ltd (No 2)

Laws this judgment relies on

Grounds of decision

Introduction

The facts

The budgets

The termination

The pleadings

The evidence

Was any contract concluded by the unsigned draft agreements? If not, was there an oral agreement between the parties?

Were there other terms of the oral agreement between the parties apart from the four undisputed items?

Proper accounting and the budget

Was there a partnership between the parties?

Was the management fee to be used to defray expenses for the Event?

Was the plaintiff obliged to procure additional sponsors for the Event?

Did the plaintiff fail to provide sufficient and appropriate publicity and media coverage for the Event?