High Court · Decided 18 November 2013

Guy Neale and others v Nine Squares Pty Ltd

Feedback & support

[2013] SGHC 249Case no. Suit No 314 of 2011

What happened, in plain English

There is no plain-English summary of this judgment yet.

Ask about this judgment

Laws this judgment relies on

Partnership Act 1890

Grounds of decision

Official text from eLitigation

Judith Prakash J:
Introduction
[1] This action, Suit No 314 of 2011 (“Suit 314”), was heard together with Suit No 955 of 2010 (“Suit 955”). The plaintiffs in both actions sued as a partnership in relation to a restaurant, bar and club business in Bali, Indonesia. While the plaintiffs identified themselves as partners, there was a dispute in Suit 314 as to whether they were indeed partners or only joint venturers.
[2] The restaurant in Bali was, according to the agreement made between the first, second, third and fifth plaintiffs in January 2000, to be named “Ku de Ta”. However, in many of the documents that were generated in relation to the business over the years that followed, it was called “Ku De Ta” and I will use this latter spelling in this judgment. Further, I will refer to the restaurant business in Bali as “Ku De Ta Bali”.
[3] The defendant, Nine Squares Pty Ltd (“Nine Squares”), is the registered owner of two trade marks in Singapore bearing the name “KU DE TA” (collectively “the Singapore Marks”). The plaintiffs’ claim in this action is for:
(a) a declaration that the Singapore Marks are held on trust for and should be transferred to the plaintiffs; or
(b) invalidation of the Singapore Marks.
[4] The fifth plaintiff in both actions is an Australian, one Arthur Chondros (“Chondros”). Chondros was one of the founders of Ku De Ta Bali and it is his position that the Singapore Marks do not belong to the plaintiffs but to Nine Squares. He was made a party to both actions as a plaintiff because the actions were brought by the “partnership” in which he is still involved. He is, however, a dissenting partner in relation to the actions and gave evidence on behalf of Nine Squares. The submissions made by the plaintiffs were accordingly made on behalf of the first to fourth and the sixth plaintiffs.
[5] Suit 955 was brought by the plaintiffs against a Singapore company, Ku De Ta SG Pte Ltd (“KDTSG”), in respect of its use of the name “Ku De Ta” for the restaurant cum bar/lounge/club (“Ku De Ta Singapore”) which KDTSG operates at the Skypark at the Marina Bay Sands development (“Marina Bay Sands”) in Singapore.
[6] Apart from Chondros, the plaintiffs are Guy Neale (“Neale”), Aki Kotzamichalis (“Kotzamichalis”), Made Wiranatha (“Kadek”), White Horses Trading Company Limited (“WH Trading”) and White Horses Investments Limited (“WH Investments”). Together with Chondros, they are the owners of Ku De Ta Bali. Nine Squares is a company incorporated in the State of Victoria, Australia. At all material times, it had two equal shareholders, viz, Chondros and one Daniel Ellaway (“Ellaway”). By the time of the trial, however, Ellaway was no longer a shareholder whilst Chondros had become a minority shareholder and there was a new majority shareholder.
[7] This judgment is in respect of Suit 314 but many of the facts recounted hereunder are relevant in respect of Suit 955 as well. The evidence that was adduced before me during the trial was admitted in both suits.
Background facts
The founding of Ku De Ta Bali
[8] In 1997, Chondros, who had previously operated a restaurant in Melbourne belonging to his family, moved to Bali in the hope of opening a restaurant there. In April 1999, he located a beach-front site which he thought would be suitable for a high-end dining destination. He then approached Kadek for assistance in obtaining the lease of the land. Kadek is an Indonesian citizen and native Balinese and was thus qualified to bid for and hold the lease. He was then, and still is, a successful businessman with many business interests including restaurants and clubs. Kadek lent his name to the bid and it was successful. Thereafter, at Chondros’ request, Kadek helped with part of the down payment for the lease. More investors were needed so Chondros approached Kotzamichalis, another Australian expatriate living in Bali, and Neale, an Australian working in Singapore, and they agreed to contribute funds for the establishment of the restaurant. Hereinafter I shall sometimes refer to these four men as the “founders”.
[9] Chondros said that he himself came up with the name “Ku De Ta” for the proposed restaurant as a play on the phrase “coup d’état”, to signify his ambition of revolutionising fine dining in Bali. He claimed that this was prior to inviting financial contributions from Kotzamichalis, Neale and Kadek. However, Kadek said that he had had a role to play in suggesting that the original name “kudeta” be split up into “Ku De Ta” because the original word would have offended political sensitivities in Bali. What is accepted is that on 4 January 2000, Kadek applied to register the trade mark “KU DE TA” in class 42 (restaurants, etc) in Indonesia and, on 20 March 2001, it was registered under Kadek’s name as Trade Mark No 469240 (“the Indonesian Mark”).
[10] The plaintiffs’ position is that the Indonesian Mark was and is held on trust for and on behalf of all of them while Nine Squares is adamant that the Indonesian Mark is held on behalf of Chondros only.
[11] In February 2000, the founders entered into an agreement entitled “Heads of Agreement” (“the 2000 HOA”). All signed it except Kotzamichalis but no issue was made of his non-signature and it was common ground that the 2000 HOA bound all four founders.
[12] The essential terms of the 2000 HOA are as follows. Clause 3 stated that Chondros would manage and control the operation of the “business”, and that he would receive a salary for doing so. The “business” was defined as “the restaurant business name [sic] ‘Ku De Ta’ to be carried out in Bali, Indonesia”. Clauses 4 to 7 of the 2000 HOA set out the founders’ respective entitlements to a share of the net profits of the business. Finally, cl 13 of the 2000 HOA stated that the 2000 HOA was to be governed by the laws of the State of Victoria, Australia.
[13] Subsequent events in 2001 caused an adjustment in the profit and equity shares in the business, so that the figures stated in the 2000 HOA no longer reflected the true position. After the adjustments, the equity shares were distributed as follows: Neale 31%, Kadek 30%, Chondros 26.5% and Kotzamichalis 12.5%. These changes were not documented.
Managing Ku De Ta Bali
[14] The restaurant was constructed in 2000. During construction the project ran out of funds and each of the founders had to contribute more money in proportion to his entitlement to profits. Chondros was the driving force behind the design, concept and construction of the restaurant but Kadek was also deeply involved. He had to carry on negotiations with the land owners and with the authorities for dispensation of the beach setback line requirement in order to construct the restaurant on the land closer to the sea front. He also obtained all necessary permits and licenses needed to establish and run the business including the restaurant and alcohol licenses. Subsequently he undertook to be the employer under Indonesian law of all the local staff and opened bank accounts in his name for the use of the business.
[15] As had been agreed, after it opened, Chondros managed the daily operations of Ku De Ta Bali. In late 2002, he enlisted Ellaway to assist him in running the restaurant. In January 2003, Chondros procured the incorporation of a public company in Australia and this was subsequently converted into Nine Squares, a private company. At all material times prior to 2010, Chondros and Ellaway were equal shareholders in Nine Squares and its only two directors.
[16] In July 2003, the founders met at the cigar lounge in Ku De Ta Bali. At that meeting, Chondros proposed that they appoint Nine Squares as the management company of the restaurant. Neale, Kotzamichalis and Kadek claimed that they did not agree and that they insisted that only Chondros act as the manager. Chondros however contended that all of them agreed to the transfer of management rights and duties to Nine Squares. All accepted however, that at that meeting they had agreed that instead of the monthly salary which Chondros had been receiving for managing Ku De Ta Bali, he should be paid a management fee. This was eventually fixed at 2.85% of net revenue.
[17] In May 2005, Ellaway proposed that the business should engage Nine Squares as Ku De Ta Bali’s management company, and also that the amount of management fees should be increased. Neale, Kotzamichalis and Kadek said that they did not agree to these proposals, while Nine Squares claimed that Kadek agreed to increase the management fees to 3.5% of net revenue. In 2008, Ellaway proposed again that the founders sign a management agreement with Nine Squares, but this was not agreed to.
Registration of the name “KU DE TA”
[18] In about October 2002, Chondros asked Ellaway to register the name “KU DE TA” as a trade mark in Australia. This was registered on 17 October 2002 in both their names. On 29 January 2004, Chondros and Ellaway assigned the Australian trade mark to Nine Squares. Neale, Kotzamichalis and Kadek claimed that they were not aware of these developments at the time.
[19] On 16 February 2004, on the basis of the Australian trade mark, Nine Squares applied to the World Intellectual Property Organization for international registration of “KU DE TA” as a trade mark, designating Singapore as one of the countries for registration. “KU DE TA” was therefore registered in class 43 (restaurants, etc) as a trade mark in Singapore (Singapore Trade Mark No T0405181Z) with effect from 16 February 2004, with Nine Squares reflected as the registered proprietor (“1st Singapore mark”) Again, Neale, Kotzamichalis and Kadek claimed that they did not know of these developments at the time.
[21] As to the use of the trade marks, it is undisputed that Nine Squares was stated as the registered owner of the “KU DE TA” trade mark in the copious corporate and promotional material published by the Ku De Ta Bali restaurant, including the press kits available on Ku De Ta Bali’s website, the CDs sold at Ku De Ta Bali (which the plaintiffs had personal copies of), and the management handbook issued by Ku De Ta Bali to its employees.
[22] On 25 May 2007, Ellaway sent the founders an email to clarify rumours that Ku De Ta was opening in Singapore. In this email, Ellaway stated that Nine Squares had secured the trade mark of “KU DE TA” in around 35 countries. Neale and Kotzamichalis aver that this statement did not cause them concern because they had assumed that Nine Squares had registered the trade marks for and on behalf of the partnership. Nevertheless, Neale called for a partnership meeting, given Ellaway’s allusions to negotiations and discussions about commencing a Ku De Ta operation in Singapore.
[23] On 29 June 2007, Kotzamichalis, Neale and Kadek attended a partnership meeting at Ku De Ta Bali. Neale claimed that he had notified Chondros of this meeting, but the latter was not at the restaurant and did not turn up. Chondros, on the other hand, explained that he had not been present because he had not been invited to the meeting.
[24] The matters purportedly discussed and agreed on by Kotzamichalis, Neale and Kadek at the meeting were later set out in an email memorandum dated 6 July 2007, sent by Neale to all the founders including Chondros (“the Email Memorandum”). Amongst other things, the Email Memorandum stated that:
In court, Chondros declared that when he received the Email Memorandum, he had gone to ask Kadek about it and Kadek had told him not to worry about it but to continue with his work.
Entry of new partners
[26] In the second half of 2008, Chondros asked his friend, Gary Collins (“Collins”), whether he would be interested in purchasing part of Chondros’ equity share in Ku De Ta Bali. Collins agreed to purchase 10% of the equity in the business from Chondros for US$700,000. Collins made the acquisition through his vehicle, WH Trading.
[27] Before Chondros transferred some of his shares to WH Trading, he, together with Neale, Kotzamichalis and Kadek, executed another Heads of Agreement in April 2009 (“the 2009 HOA”). The 2009 HOA was very similar to the 2000 HOA. Significantly, the definition of “business” was unchanged. Subsequently, Chondros’ share transfer to WH Trading was effected by way of a deed of assignment dated 7 April 2009.
[28] In 2010, Chondros sold a further 6.5% equity stake in the business to Collins. This time Collins used another corporate vehicle, WH Investments, for the acquisition. Chondros also borrowed money from Collins against the collateral of another 4% stake in Ku De Ta Bali. When Chondros failed to repay the loan, Collins (through WH Investments) acquired that 4% stake in August 2011.
Dispute between Chondros and Ellaway
[29] Although Kotzamichalis, Kadek and Neale did not agree that Nine Squares was to become Ku De Ta Bali’s management company, they did not object to Chondros using Nine Squares to manage and operate the Ku De Ta Bali restaurant, so long as Chondros remained personally in charge of management.
[30] Nine Squares’ practice was to procure various supplies for Ku De Ta Bali and pay the suppliers first. It would then send the invoices from the suppliers to Ku De Ta Bali for reimbursement. Ellaway was in charge of the invoices. Sometime in 2009, Chondros thought that the amounts of the suppliers’ invoices seemed inflated. By April that year, Chondros was convinced that Ellaway was “ripping [Ku De Ta Bali] off” by altering and/or forging suppliers’ invoices to inflate the amounts charged under the invoices, and then claiming those inflated amounts from Ku De Ta Bali.
[31] In May 2009, Chondros confronted Ellaway about this issue. Chondros was dissatisfied with the latter’s explanations as to his conduct and told him that Nine Squares could not continue to manage Ku De Ta Bali if Ellaway had defrauded Ku De Ta Bali. At the trial of this action, Ellaway admitted that he had altered the suppliers’ invoices so that they showed more than what had actually been billed.
Chondros’ unsuccessful attempt to expand overseas
[32] In 2009, Chondros became acquainted with one Justin Wright (“Wright”). He asked Wright to structure and investment plan which would facilitate the expansion of the “KU DE TA” brand overseas. The idea suggested was the incorporation of a holding company “Ku De Ta Holdings” which would own all the “KU DE TA” trade marks for the purpose of franchising the brand. Chondros called this the “Dream Project”. He invited the other founders of Ku De Ta Bali to participate in this venture, but ultimately the project did not take off.
Licence agreement for the 1st Singapore Mark
[33] On 18 March 2009, one Karl Patel (“Patel”) introduced one Chris Au to Chondros and Ellaway as a party interested in investing in a potential venture at the Marina Bay Sands. Chris Au was a Hong Kong businessman who wanted to use the “KU DE TA” name for a restaurant in Singapore. He knew that Chondros and Ellaway were the directors and equal shareholders of Nine Squares. He was also aware that there were other investors in Ku De Ta Bali besides Chondros.
[34] Ellaway replied to Patel and Chris Au, dropping Chondros out of the email loop, to ask if he could speak with Chris Au.
[35] In the meantime the dispute between Chondros and Ellaway escalated. On 24 June 2009, Chondros sent an email to Ellaway asking him for: (a) an accounting of all amounts paid to Ellaway by Nine Squares; (b) access to Nine Squares’ books; (c) an accounting in respect of Ku De Ta Bali; and (d) a list of any obligations Ellaway had entered into purportedly on behalf of Nine Squares. Chondros also wrote, “Please note that until all matters are determined you should not enter into any agreements or incur any expenditure without my express written consent”.
[36] On 29 June 2009, without Chondros’ knowledge, Ellaway caused Nine Squares to enter into a licence agreement with Chris Au (“the Licence Agreement”), under which Nine Squares purported to license to Chris Au the use of the 1st Singapore Mark within Singapore.
Second Singapore trade mark registration
[37] On 30 June 2009, Ellaway caused Nine Squares to apply in Singapore to register “KU DE TA” as a trade mark in classes 9 (music) and 25 (apparel). This trade mark was subsequently registered as Singapore Trade Mark No T0907126DF (“2nd Singapore Mark”) with effect from 30 June 2009. Nine Squares was shown as the registered proprietor of the 2nd Singapore Mark.
The formation of KDTSG
[38] In the meantime, Chris Au was working closely with Patel on the project to open Ku De Ta Singapore at Marina Bay Sands (“the Project”). On 20 July 2009, a joint venture agreement was executed between Retribution Limited (a British Virgin Islands (“BVI”) company belonging to Chris Au) and Rocky Cape International Limited (a BVI company belonging to Patel), whereby it was agreed that Kudeta Limited would be incorporated in the BVI as a joint venture between Retribution Limited and Rocky Cape International Limited. It was also agreed in this joint venture agreement that Kudeta Limited was to incorporate KDTSG in Singapore, and that Chris Au was to sub-license the use of the 1st Singapore Mark to KDTSG. Kudeta Limited would raise funds for the Project by allotting shares in itself to third party investors. Kudeta Limited was incorporated on the same day.
[39] On 13 August 2009, KDTSG was duly incorporated with Kudeta Limited as its sole shareholder. Later, on 23 November 2009, Chris Au assigned his rights under the Licence Agreement to KDTSG.
The Australian court proceedings
[40] Chondros found out in February 2010 about the Licence Agreement. He immediately disputed that Nine Squares had a right to license the 1st Singapore Mark and contended that the Licence Agreement was void.
[41] In April 2010, KDTSG and Chris Au commenced legal proceedings in Victoria, Australia, against Nine Squares seeking, inter alia, a declaration that the Licence Agreement was valid (“the Australian proceedings”).
[42] Chondros initially defended the Australian proceedings vigorously. He filed an affidavit swearing that:
[43] Subsequently, on 9 July 2010, the Australian proceedings were settled. In an apparent volte face from his initial insistence that the Licence Agreement was invalid, Chondros entered, on Nine Squares’ behalf, into a deed of settlement with Chris Au and KDTSG. This deed affirmed the Licence Agreement with slight variations.
The plaintiffs commence proceedings in Singapore
[44] In September 2010, KDTSG opened Ku De Ta Singapore. In December 2010, the plaintiffs commenced Suit 955 against KDTSG to enjoin the latter from using the trade name or mark “KU DE TA” and in passing off. In 2011, they started this action (“Suit 314”) by way of an originating summons. It was subsequently converted to a writ action.
The issues
[45] The plaintiffs have defined the issues in this suit as follows:
(a) Who owns the name/mark “KU DE TA” and its associated goodwill?
(b) Was Chondros entitled to procure Nine Squares to register the 1st Singapore Mark in February 2004 and the 2nd Singapore Mark in June 2009?
(c) Are the Singapore Marks held by Nine Squares on trust for the plaintiff?
(d) Alternatively, are the grounds for invalidating the Singapore Marks, as set out in the Trade Marks Act (Cap 332, 2005 Rev Ed) (“TMA”), satisfied?
[46] Nine Squares did not quarrel with the way in which the plaintiffs had delineated the issues. However, the reliefs claimed by the plaintiffs in their statement of claim relate entirely to the Singapore Marks and therefore the main issues for decision are (c) and (d) above. The formulation of the first issue, as to who owns the name/mark “KU DE TA” and its associated goodwill is too broad because it is conceivable that the Indonesian Mark could be owned legally and beneficially by different parties from those who are the legal or beneficial owners of the Singapore Marks. Given that Nine Squares is the legal owner of the Singapore Marks, the plaintiffs’ claim in essence is that they are the beneficial owners of the same. Such beneficial ownership can arise by way of either an express trust or a constructive trust. It is in relation to the plaintiffs’ assertion that even if no express trust was created, there was an institutional constructive trust in the plaintiffs’ favour because Chondros breached his fiduciary duty to the partnership by registering the Singapore Marks in Singapore, that the question of who had prior ownership of the name/mark “KU DE TA” comes into play. It is also in connection with the assertion of an institutional constructive trust that I have to consider the second issue, that of whether Chondros was entitled to cause Nine Squares to apply for registration of the Singapore Marks.
[47] Whilst the issue of the institutional constructive trust should be considered after the express trust issue, I think that I should deal at the beginning with the issue of whether the name/mark “KU DE TA” was owned by the founders collectively or Chondros alone or Nine Squares prior to the registration of the 1st Singapore Mark. In this connection, I would have to consider the nature of the association between the plaintiffs inter se. The parties in their closing submissions also put these issues as requiring their initial attention.
[48] Therefore, I will deal with the issues as follows:
(a) Prior to the registration of the 1st Singapore Mark who, if anyone, owned the name/mark “KU DE TA”?
(b) Does Nine Squares hold the Singapore Marks on an express trust for the plaintiffs?
(c) If not, does Nine Squares hold the Singapore Marks on a constructive trust for the plaintiffs and, in this connection, was Chondros entitled to cause Nine Squares to register the 1st Singapore Mark in February 2004 and the 2nd Singapore Mark in June 2009?
(d) Should the registration of the Singapore Marks be invalidated under s 23 of the TMA?
The ownership of the name/mark KU DE TA
[49] Just to avoid confusion, I should state that in this portion of the judgment, I am dealing generally with the name/mark “KU DE TA” and not with the Singapore Marks. I am focussing on the period between 1999 when Chondros and Kadek bid for the land in Bali and 2004 when the 1st Singapore Mark was registered.
[50] Nine Squares takes the position that after securing the lease, Chondros came up with and decided on the name “KU DE TA” for his restaurant and it was only after he had thought of the concept, design and name of the restaurant that he, in late 1999, sought investments from Kadek, Kotzamichalis and Neale. The other men had no part in deciding the name. Chondros then wanted to protect his rights to the name and he sought Kadek’s assistance to register it on his behalf. Kadek applied for registration of the trade mark in Indonesia on 4 January 2000 and, in line with his understanding that he was doing so on behalf of Chondros, subsequently handed the original trade mark application form to Chondros. As at 4 January 2000, the business venture between the founders had yet to be constituted and therefore the Indonesian Mark was not being registered for any alleged partnership. Even after the 2000 HOA came into effect, it did not give the plaintiffs ownership of the Ku De Ta name or the Indonesian Mark. These continued to belong to Chondros exclusively.
[51] For the purposes of determining ownership of the name/mark “KU DE TA”, it is irrelevant who devised the name and whether it was the sole inspiration of Chondros or, as the plaintiffs asserted, whether Kadek had a part to play in the way it was formulated. This was conceded by Mr Richard Hoad, an Australian lawyer specialising in intellectual property law who testified on Nine Squares’ behalf. The plaintiffs’ legal expert, Mr Raymond A Finkelstein QC (“Mr Finkelstein”), testified that under the laws of Victoria there is no property in a name as such. It is only when a name carries goodwill with it or it has been registered as a trade mark that it can be owned. So, no one owned the name when it was first agreed that “KU DE TA” should be the name of the restaurant business that the founders were planning to carry on in Bali. When the Indonesian Mark was issued subsequently, the legal owner was Kadek.
[52] The parties are agreed that the starting point for determining if the founders had rights of ownership inter se in respect of the “KU DE TA” name/Indonesian Mark is the terms of the 2000 HOA. The plaintiffs’ expert, Mr Finkelstein, stated that “to determine whether the parties intended the name/mark Ku De Ta to be partnership or joint venture property, it is necessary to examine the [2000 HOA] and construe that agreement in accordance with the principles applicable in Australia for the construction of contracts”. Where the parties differ is that Nine Squares says that the exercise must end with the 2000 HOA whilst the plaintiffs contend that the 2000 HOA was not and could not have been intended by the original parties to be a complete record of their rights and obligations inter se, and therefore the conduct of the founders and the surrounding circumstances outside of the 2000 HOA can also be looked at.
[53] Looking at the 2000 HOA, it is clear that the founders had come together with a view to conducting a restaurant business which was to operate under the name “KU DE TA”. This can be seen from the following provisions of the document:
(a) Recital A, which states that “Chondros has established and developed the business and is desirous to form a partnership in the future for the purposes of conducting the business (as hereinafter defined)”. (It should be noted that this recital was not literally true as the business had not been established or developed yet.)
(b) The definition of “The Business” in cl 1(1) to mean “the restaurant business name “Ku De Ta” to be carried out in Bali, Indonesia”.
(c) The provisions regarding capital contributions by the partners. “Capital Contribution” is defined in cl 1(1) as “the amounts contributed by each member to establish the Business as per Schedule B”.
(d) Clause 2, which provides that “The Members acknowledge that they are co-operating in the establishment of the business in Indonesia and that the obligations of each of the parties to this Agreement and the transactions noted in this Agreement are directed towards the successful establishment and running of the business”. (Note: in contrast to Recital A, this clause reflected the situation as it existed on the date of signing.)
(e) Clauses 4 to 7, which set out the parties’ obligations and the consideration provided by each partner in return for a particular percentage of the net profits of the business.
(f) Clause 3(d), which provides that “At the expiration of the Term all rights shall vest absolutely in the Members”. The “Term” is defined in cl 1(1) to mean 20 years commencing from 6 July 1999.
[54] The foregoing clauses indicate the way in which the parties intended to regulate their business. I find it significant that Recital A mentioned that the intended form of business was “a partnership”. It was drafted by a lawyer appointed by Chondros who took instructions from Chondros. It is clear that the lawyer understood his instructions to be that the founders would be forming a partnership business which related to the construction and operation of a restaurant in Bali under the name “KU DE TA”. It is in this context that cl 3(d) must be interpreted. The question is what the word “rights” covered. Mr Finkelstein’s opinion was that “rights” would be taken to refer to rights in the partnership property.
[55] I agree with the plaintiffs that the partnership property would consist of the fixed assets and other chattels belonging to the business, the lease of the land and the name and goodwill of the restaurant. Mr Finkelstein explained that, applying Australian law principles, when construing commercial contracts “the language used [must be given] the ordinary sense that business men would give to it” (citing Weardale Coal and Iron Co Ltd v Hodson [1894] 1 QB 598 at 601). In this context, the parties cannot have intended that the “rights” that would belong to them would be confined only to assets that would be worth very little such as fittings, fixtures and chattels and outstanding debts (on the basis that after 20 years the lease would have expired and have no further value). Parties would have intended that “rights” would cover the name “KU DE TA” plus any goodwill attached to the name as a result of the successful operation of the business. After 20 years of successful operation, the name and the goodwill would be the most valuable asset of the partnership. Mr Finkelstein considered that such a construction would accord with ordinary business sense. I agree. Ordinary business sense would be the same in Australia as in Singapore.
[56] There was nothing in the 2000 HOA that preserved any interest that Chondros might have had in the name “KU DE TA” for himself alone. Given that he came up with this name and that he was the one giving instructions to the lawyer drafting the 2000 HOA, it is significant that he did not think to protect his rights in the name from the other founders. If his evidence is to be believed, from early-January 2000 he wanted his interest in the name protected and that was why he asked Kadek to register it for him in Indonesia. If that was indeed the main reason for the trade mark registration, Chondros would also have instructed his lawyer to ensure that the 2000 HOA, which was supposed to be signed by all the founders, contained a provision whereby they all acknowledged his ownership of the name.
[57] I agree also with the plaintiffs’ submission that it can be inferred from the conduct of the founders and the surrounding circumstances that they had agreed from the beginning that the “KU DE TA” name and goodwill, as it grew, would belong to the partnership. The founders were getting together to establish a restaurant with Neale, Kotzamichalis and Kadek contributing the majority of the funds needed for the business. It is not believable that they would have agreed that the name and the brand of the restaurant should belong only to one of them, ie, Chondros, notwithstanding that he was the originator of the name. Second, the name had not been used by any of the founders in connection with any other business and was thought of specifically for the business established pursuant to 2000 HOA. In December 1999, Chondros had prepared a brochure with financial projections for the restaurant which he showed to Neale when trying to persuade him to invest in the project. It was clear then that what Chondros wanted was to open a restaurant with a specific name and that was the business that Neale was offered a share in. In those circumstances, it cannot be inferred that Chondros intended to keep the name for himself alone. That would not have been understood by Neale, Kadek or Kotzamichalis when they got together with him to develop the project. The name, though attractive and attention grabbing, was a new name and not attached to any previous business of any kind. As such, there would be no reason for the other founders to believe that Chondros had special rights to the name.
[58] It is also relevant that at the time the 2000 HOA was signed, it was not certain that the name would be approved by the Indonesian authorities. Kadek had to work hard to get such approval because of the sensitivity of the name. It was to distance the word from its political roots that either Chondros or Kadek broke it up into its three component syllables. Chondros’ evidence was that he told Kadek to “get me that name” and that evidence was used by Nine Squares to justify its assertion that the Indonesian Mark was held on trust for Chondros alone. I disagree that the remark can be interpreted so unequivocally as to have clearly indicated to Kadek that Chondros wanted the name for himself alone. The obvious interpretation was that Chondros wanted approval for the name so it could be used for the intended business. Ownership of the name or the Indonesian Mark was another matter. Indeed it was Kadek’s evidence that he considered himself as holding the Indonesian Mark on trust for the partners. Whilst at the time he applied for it, the partnership was not yet in existence, it was anticipated that there would be additional investors in the business and that it would not belong to Chondros alone. Indeed, Kadek himself had by then put a lot of effort into securing the lease and was an intended investor so at the least he would have contemplated holding the mark for himself as well as for Chondros. While he may have handed the original application form for the trade mark to Chondros, there is no dispute that at all times Kadek kept the Indonesian Mark registration certificate itself in his own possession. It is also worth mentioning that in correspondence over the years Ellaway repeatedly conceded that the Indonesian Mark belonged to the partners of Ku De Ta Bali.
[59] I consider the conduct of the founders to be relevant because I accept Mr Finkelstein’s opinion that the 2000 HOA was not a complete record of the parties’ agreement. It did not provide for matters like the liability of the partners to contribute to debts of the business or what was to occur on a winding up of the business. I also accept Mr Finkelstein’s evidence that the applicable Australian legal principle is that where a written agreement is not a complete record of what has actually been agreed, the court would have to infer the other terms agreed to by the parties from their conduct.
[60] The facts (particularly those in [57] and [58] above) distinguish the present situation from that which existed in the case of Ratna Ammal v Tan Chow Soo [1964] MLJ 399, a decision of the Federal Court of Malaysia. The question there was whether a trade mark which was used by a partnership business belonged to the partnership or to the respondent in the case who was one of the partners. It was held that the property rights in the trade mark were vested in the respondent alone. The basic facts were that since September 1959, the respondent had been importing and selling sweetened condensed milk under the name “Saint Brand”. In August 1961, the respondent applied for this trade mark to be registered in respect of milk and other dairy products. The trade mark was registered in the respondent’s ownership on 1 October 1962 but took effect from the date of the application. In the meantime, on 3 November 1961, a written agreement was executed providing for the respondent and the appellants to constitute a “syndicate” to market “Saint Brand” sweetened condensed milk. The recital in the agreement made reference to the respondent’s application for the registration of the trade mark and the appellants argued that this recital and the fact that the business was to sell the milk in tins bearing the trade mark supported the inference that the trade mark had become partnership property. The court held, however, that there was nothing in the agreement to suggest that the parties had agreed that the rights in the trade mark were to become partnership property in respect of all the goods it covered. The agreement contained clauses providing a careful consideration for the partners’ interests in regard to finance and in regard to the respondent having to provide premises for the business free of charge. In that situation, had the partners agreed that the trade mark should belong to them all, this agreement would have been clearly expressed in the document. The court also noted that the right to use the trade mark was acquired by the respondent before the partnership was formed and was originally acquired by him alone. In the present case, no business had been built up by Chondros at all before the application for the Indonesian Mark.
[61] On the issue of the form of association, as I have stated, the 2000 HOA said it was a partnership and Nine Squares referred to it as such in these proceedings until very late in the day. In its original defence filed on 2 June 2011, Nine Squares admitted that the plaintiffs were partners of Ku De Ta Bali. It was only in May 2012 that it changed its position to assert instead that the plaintiffs were in a “business venture”. In the Australian proceedings Chondros also referred to Ku De Ta Bali as a partnership. Further, the laws of the State of Victoria, Australia, which govern the 2000 HOA, define partnership as “the relation which subsists between persons carrying on a business in common with a view of profit” (see s 5 of the Partnership Act 1958 (Act 6330 of 1958) (Vic)). The evidence of Mr Finkelstein was that the conduct of the parties as well as the provisions of the 2000 HOA would determine whether their relationship was a partnership or not. Mr Kym Fraser (“Mr Fraser”), the expert called by Nine Squares, opined that the nature of the plaintiffs’ arrangement depended only on what they had agreed and not on what they did. However this opinion is contrary to the statement of law in The Law of Partnership in Australia (Keith L Fletcher) (Lawbook Co, 9th Ed, 2007) at para 2.35. Further, Mr Fraser conceded that if there were areas that were not covered by the written agreement, the court could look at the parties’ conduct at any time to determine what they had agreed on in respect of those areas.
[62] Looking at the evidence, I am satisfied from the terms of the 2000 HOA and the conduct of the parties that they intended to be, and duly conducted themselves as, partners. I do not agree that cll 3(a) and 3(b) of the 2000 HOA demonstrate that there was no intention to form a partnership.
[63] Clause 3(a) and (b) provide that:
[64] Mr Fraser’s opinion was that these clauses conferred powers on Chondros which the other parties did not have. It was suggested that the requirement of mutuality to constitute a partnership meant that all partners must have the ability to bind the other parties and the presence of the clauses meant that there was an absent of the required mutuality. However, Mr Fraser also agreed that in this case, all the founders had a role to play in the critical decision making of the business. Second, because the business was in Indonesia, there were many transactions which could only be entered into by Kadek on behalf of the founders. Mr Fraser acknowledged that this circumstance would “vary” the 2000 HOA because it meant Chondros was not the only one who could enter into transactions and that might change the character of the founders’ arrangements.
[65] Quite apart from the above, Mr Finkelstein’s evidence that mutuality in the context of partnership means that there ought to be reciprocity of obligations between the partners inter se is more logical and in accordance with the common law of partnership from which the Victorian law sprang. Mr Finkelstein’s opinion was that the obligations which the parties assumed under cll 4 to 7 of the 2000 HOA constituted clear mutual obligations. In addition, under cl 10.5 of the 2000 HOA, meetings of the members were competent to exercise all the authorities, powers and discretion vested in the members. This indicated that the parties were running the business in common.
[66] As a partner, Chondros owed fiduciary duties to the other partners. It should be noted that Nine Squares conceded that even if I found the relationship between the founders inter se to be that of joint venturers, Chondros would still owe the other founders fiduciary duties.
Express trust
The law
[67] On the creation of express trusts, the following passage at para 21-019 of Snell’s Equity (John McGhee QC gen ed) (Sweet & Maxwell, 32nd Ed, 2010) (“Snell’s Equity”) was quoted with approval in Tee Yok Kiat and another v Pang Ming Seng and another [2012] SGHC 85 at [29]:
[68] The creation of an express trust is straightforward: the settlor must show an actual or express intention to convey the property on trust. This can happen in two ways: the settlor declares himself as trustee, or the settlor transfers the trust property to the trustee. In this case, only the first situation is applicable as the partners who never had legal title to the Singapore Marks could not have been the settlors. Hence, it must be the plaintiffs’ case that Nine Squares intended to hold the Singapore Marks as trustee for the partnership when the trade marks were registered.
[69] In addition, there must be present the three certainties: certainty of intention, certainty of subject matter and certainty of objects. For there to be certainty of intention, a careful inquiry of the facts must show that the settlor clearly intended to subject the trust property to a trust obligation. This can be discerned from the language used in a trust document, or, where the language used is found to be inadequate, a settlor’s intention deduced as a matter of “business common sense” may even be sufficient (Don King Productions Inc v Warren [2000] Ch 291 at 311). The settlor’s intention must be clear on two fronts: that the trustee’s duties are to be legally enforceable rather than merely social or moral, and that it would involve trust duties as distinct from other legal relationships such as that between debtor and creditor (Snell’s Equity at para 22-013). As for certainty of subject matter, there must be a clearly identifiable property intended to be subject to the trust, since trusts cannot exist in abstract. The property must be specifically identified and there must be no conceptual uncertainty surrounding the subject matter. Notably, a settlor cannot create a trust of future property which he does not presently own but hopes to own sometime in the future (Re Ellenborough [1903] 1 Ch 697). Lastly, to establish certainty of objects, there must be ascertainable legal persons who possess the standing to enforce the obligations under the trust, and for whom the property is held.
[70] The express trust is only brought into existence when it is fully constituted, ie, legal title to the property has been vested in the trustee, and beneficial title in the beneficiaries. This step prevents the settlor from retaining ownership of the property. This can be done in a few ways, the most common of which is a declaration of a trust; whether a declaration is an effective one or not is a question of fact. For instance, whilst words spoken in “loose conversation” would not amount to an effective declaration of trust (Jones v Lock (1865) LR 1 Ch App 25), it was suggested in Paul v Constance [1977] 1 WLR 527 that repetition of similar words in conversation over a period of time (“as much yours as mine” there) may be sufficient.
[71] Although Re Vandervell’s Trust (No 2) [1974] Ch 269 seems to suggest that an effective declaration may also be inferred from conduct, this case has been described as “notoriously controversial” due to the questionable sufficiency of intention to create a trust in that case (Okeke Chukwuebuka, “Re Vandervell’s Trust revisited: was Denning really wrong?” (2013) 18 Cov LJ 107 at p 107). Mr Vandervell had set up a trust for his children to be managed by Vandervell Trust Company (“the VTC”). He later obtained a share option to be held on resulting trust for himself by the VTC, which was exercised, and shares were transferred to the VTC. Mr Vandervell then died with nothing in will because he believed that his children were provided for by the trust. Lord Denning MR held that the exercise of the option was tantamount to terminating the resulting trust in favour of Mr Vandervell, and in fact created “a valid trust” (at 319). However, it should be noted that this approach of inferring effective declarations from mere conduct has been criticised as not representing a clear and present irrevocable declaration of trust adequately, and should be approached with caution (Pearce, Stevens & Barr, The Law of Trusts and Equitable Obligations (Oxford University Press, 5thEd, 2010) (“Pearce et al”) at p 200).
[72] In Underhill and Hayton: Law Relating to Trusts and Trustees (LexisNexis, 18th Ed, 2010) it is stated at para 9.8 that “[i]n exceptional cases it may be possible for a court to find that though there has been no actual express declaration of trust it is possible to infer a declaration of trust from acts showing that a person has constituted himself a trustee, ie, from conduct evincing an intent to deal with his property so that somebody else to his own exclusion acquires the beneficial interest (or part thereof) in his property” [emphasis added].
Submissions and analysis
[73] It must be borne in mind throughout the discussion that follows that the legal owner of the Singapore Marks is Nine Squares and that at all material times, this entity was in turn owned by Chondros and Ellaway in equal shares and they were both involved in the activities of Nine Squares, though perhaps Ellaway’s participation was greater than Chondros’. The evidence showed that while Chondros was the creative mind and the person with the ideas about how Ku De Ta Bali should be run and how its business and that of Nine Squares should be developed, Ellaway handled all the administrative details and did all the paperwork. Nine Squares cannot simply be identified with Chondros. Thus, in attempting to ascertain whether there was an express intention to create a trust over the Singapore Marks, it is the intention of Nine Squares that I must focus on as shown through its words and, perhaps, conduct if the same is clear enough.
[74] The plaintiffs submitted that the trust arose because Chondros had used Nine Squares to register “KU DE TA” trade marks overseas in the name of Nine Squares. However, Chondros on behalf of the partners had intended that Nine Squares would hold the KU DE TA trade marks “on trust for the Ku de Ta Partnership”. I shall refer to these marks collectively as “KU DE TA Marks”.
[75] The plaintiffs relied on the following factors as showing the express intention required:
(a) discussions between Chondros and the partners regarding overseas expansion of Ku De Ta Bali;
(b) discussions between Chondros and Kotzamichalis, and Chondros and Kadek on registration of KU DE TA Marks;
(c) the 29 June 2007 partnership meeting and the 6 July 2007 email memorandum;
(d) Neale’s discussion with one Lachlan Gyde;
(e) expenses for exploring expansion opportunities were charged to Ku De Ta Bali;
(f) acquisition of Chondros’ stake by WH Trading;
(g) Ellaway’s email to Kotzamichalis dated 21 November 2008;
(h) the Dream Project;
(i) Gili Meno;
(j) Chondros’ agreement that the domain name www.kudeta.net belonged to the partnership;
(k) Arthur Tay’s evidence;
(l) Ellaway’s behaviour; and
(m) Chondros’ admissions in the Australian proceedings and in correspondence with Ellaway and Marina Bay Sands.
[76] The plaintiffs also made detailed submissions on their assertion that what Ellaway had told third parties about Nine Squares’ registration of trade marks and other actions of Nine Squares in relation to the trade marks were irrelevant to the determination of whether a trust existed.
[77] Nine Squares submitted that the plaintiffs had failed to show any evidence of an intention on the part of Nine Squares to hold the Singapore Marks on trust for the plaintiffs. They had not even been able to identify the point in time at which Nine Squares intended to create the alleged trust or the terms of the trust. In their closing submissions, the plaintiffs had raised conversations with Chondros spanning a period of almost ten years in which Chondros had never once expressly declared to them that the KU DE TA Marks were held by Nine Squares on behalf of the plaintiffs. Instead, the evidence showed that Nine Squares always stated that it owned the KU DE TA Marks and that it behaved in a manner that was consistent with its ownership.
[78] I will consider the evidence which the plaintiffs rely on.
Discussions between Chondros and the partners regarding overseas expansion of Ku De Ta
[79] The plaintiffs cited instances where: (a) the partners had discussions over what business model to use for expansion (viz, a royalties or build-and-operate model); (b) Neale had warned Chondros against rushing to take Ku De Ta overseas; (c) Kotzamichalis had informed Chondros about various overseas opportunities; and (d) Chondros had spoken to Kadek about potential expansions in Indonesia and Thailand.
[80] However, it is difficult to conclude that any of these discussions amount to or evidence an intention to create an express trust. Notwithstanding the fact that mere interest in overseas ventures is quite distinct from the prospect of securing intellectual property rights in those destinations, it is unclear that Chondros exhibited any intention to do the latter on behalf of the partners. Moreover, in the larger scheme of all the discussions that Chondros and Ellaway undertook with other individuals in relation to overseas expansion, the involvement of the partners, by comparison, was miniscule. The following are instances of such exploratory discussions (unless otherwise indicated under “Remarks”, only Chondros and Ellaway were involved in the discussions, without the participation of Neale, Kotzamichalis or Kadek):
[81] These exchanges with various other parties (apart from items 1, 11, 13, 15, 16 and 21) show that the founders were left unaware of most of the discussions on expansion, and that Ellaway and Chondros seldom saw it necessary to include them. The correspondence with various interested parties indicated that Nine Squares was consistently representing itself as the owner of the Singapore Marks; no mention was made of the fact that there would be participation from the rest of the partnership. Save for the potential Phuket venture with Above + Beyond Resorts in 2007 (item 13), Chondros and Ellaway never informed the partners, much less sought their opinion, on anything related to overseas expansion, unless that specific opportunity had been referred to them through a partner (like Kotzamichalis’ referrals in items 11, 15 and 16). The fact that the partners were excluded from the bulk of the expansion discussions is prima facie consistent with Nine Squares’ claim that the opportunities were pursued for Nine Squares’ benefit alone, as expressed by Chondros in oral evidence:
[82] Given that from the outset, Chondros had never concealed his desire to take Ku De Ta to the world, it is not surprising that he should have discussed a plan or two with individual partners of Ku De Ta Bali at one point or another. In fact, he had good reason to as he had always kept in mind that these were investors to whom he would want to offer opportunities for investment.
[83] These few instances of Chondros sharing his ambition and plans cannot show that Nine Squares or Chondros intended to create a trust for the benefit of Ku De Ta Bali.
Discussions between Chondros and Kotzamichalis, and Chondros and Kadek, on the registration of KU DE TA Marks overseas
[86] The fact remains, however, that Chondros did tell two of the partners about these registrations. Can it be inferred from such conversations that Chondros was indicating his intention that the same be held on trust for Ku De Ta Bali? There are two other possibilities as to why Chondros might have passed on this information. He could have been angling for the partners to offer him reimbursement or he could have been telling them simply for the sake of doing so – without any existing intention for the partnership to be involved in future projects. If it were the former, then this would clearly indicate that Chondros registered the trade marks for the partnership. In the latter case, however, this could be explained by Chondros’ long-held hope that the partners would eventually get involved as investors in future projects as and when they arose; in such a situation, keeping them up to date with developments would only seem prudent.
The 29 June 2007 meeting and the 6 July 2007 email memorandum
[88] The plaintiffs pointed out that in Ellaway’s email of 25 May 2007, he had assured them that “we [ie, Chondros and Ellaway] would also involve the original KDT shareholders”, which led them to believe that the partnership owned the KU DE TA Marks. As mentioned earlier, this email prompted a meeting on 29 June 2007 which was attended by Kotzamichalis, Kadek and Neale. The three of them made certain decisions which were recorded in the Email Memorandum of 6 July 2007 drafted by Neale. Amongst other things, the three had agreed that: (a) the management of Ku De Ta Bali was vested in Chondros alone, and no other arrangement would be entertained; (b) any use of the Ku De Ta name by any partner had to be approved by all the partners; and (c) no unauthorised and unapproved name (such as “Nine Squares”) could be used on the collectively owned Ku De Ta Bali website. Chondros, who was copied in the Email Memorandum, did not respond to it. The other partners then took Chondros’ lack of reaction to the Email Memorandum’s contents, and Ellaway’s subsequent email on 21 November 2007 speaking of an opportunity for the partners to invest “as well as the commencement of discussions regarding the matter of royalties due & payable” (see [25] above), as clear indications that the partnership would be owed royalties because they owned the KU DE TA Marks.
[89] In my view, the above events do not evince any clear intention to create an express trust. First, the email of 25 May 2007 was sent by Ellaway, not Chondros. The record is full of instances where Ellaway had specifically asserted Nine Squares’ ownership of the KU DE TA Marks to various parties and the wording of the 25 May 2007 email does nothing to contradict that assertion and indicate the recognition of a trust arrangement. The plaintiffs submitted that because Ellaway said “we would involve the original KDT shareholders” this meant that the partners would be involved in any overseas project and this could only be because they were the owners of the KU DE TA Marks. I disagree. Ellaway’s words could equally be read as an assurance to the existing partners that they would not be forgotten in a future expansion and would be offered an opportunity to participate in the same, such offer being made out of goodwill rather than out of obligation.
[90] Second, Chondros’ silence regarding the Email Memorandum was, according to him, due to the assurance given by Kadek that he could safely ignore Neale’s email and continue as per normal. Whilst I have some doubts about the veracity of Chondros’ account of his conversation with Kadek, mere silence or perceived acquiescence is certainly insufficient by itself to create or evidence the creation of an express trust.
Neale’s discussion with Lachlan Gyde
[91] Sometime around 2007 or 2008, Neale had met with one Lachlan Gyde, who was involved in the Marina Bay Sands project. Lachlan Gyde told him that Ellaway had told one Kevin Troy (an individual “tasked by the Sands group to look for marquee names to set up shop at Marina Bay Sands”) that Neale had no say in setting up a Ku De Ta outlet at Marina Bay Sands. After Neale related what he had found out to Kotzamichalis and Kadek, Kotzamichalis approached Chondros for clarification. Chondros purportedly responded “that he was just trying to secure a site in Singapore for all of us as partners”. The plaintiffs thus claim that Chondros’ clarification had assured them that Chondros intended the KU DE TA Marks to be held on trust for them.
[92] In my view, this is insufficient to create or evidence the creation of an express trust. There are other possible interpretations of what Chondros had said; for example, he might well have been looking out for the Ku De Ta Bali partners as future investors in new ventures, as opposed to beneficiaries of the trade marks. His remark was on a par with what Ellaway said in the 25 May 2007 email.
Expenses for exploring expansion opportunities charged to Ku De Ta Bali
[93] The plaintiffs claim that the fact that Chondros charged expenses incurred in connection with exploring various overseas opportunities to Ku De Ta Bali’s account shows that the partnership was the true owner of the Singapore Marks. They cited in their closing submissions five instances of such expenses which were booked into Ku De Ta Bali’s expense ledgers. It should be noted that during the trial, it was asserted by Kotzamichalis that there were more than ten instances of such charges having been made and therefore the closing submissions represented somewhat of a contraction of the plaintiffs’ position.
[94] I am not persuaded by this submission. The nature of these expenses is in dispute, as Nine Squares claims that the trips charged to Ku De Ta Bali’s account were in fact rightly charged, ie, these expenses were incurred for the procurement of goods and services for the Ku De Ta Bali restaurant, and were unrelated to the exploration of overseas opportunities. In this connection, it points to the evidence adduced at trial of various other expenses which were incurred for the purpose of exploring overseas opportunities and correctly charged to Nine Squares. It is significant that Nine Squares was able to prove that it did often pay for such expenses out of its own funds without recourse to the funds of Ku De Ta Bali. Further, the five instances quoted by the plaintiffs are not all unequivocal instances when Chondros charged expenses for overseas exploration to Ku De Ta Bali in respect of trips that were taken only for that purpose.
[96] The next two instances related to trips to Singapore in March 2006 and January 2007 and the plaintiffs claim that these trips were to meet Sentosa representatives about expansion opportunities in Sentosa for the Ku De Ta brand. In both these instances, airfares of the attending persons, namely Chondros, Ellaway and one Fredo Taffin, were paid by Ku De Ta Bali. Nine Squares said that it was a bare assertion that such airfares had not been repaid or reconciled by it. The same response was made to the fourth instance which was when Ku De Ta Bali paid for Ellaway’s airfare to Singapore in May 2005 when he met one Hani Al Maki to discuss potential expansion opportunities in Singapore.
[97] The fifth instance related to a trip to Dubai in June 2006 taken by Chondros and one Asif Mehrudeen, the Ku De Ta chef. The two men attended a trade show but Chondros agreed that during the visit, he had visited a potential restaurant site. The expenses for this trip were paid by Ku De Ta Bali. However, Asif Mehrudeen testified that the purpose of this trip was to attend the trade show and Ku De Ta Bali had paid for this as a way of thanking him for his work. Chondros also said that he had accompanied Asif Mehrudeen because the latter had not wanted to go alone. The evidence in my view does not indicate that it was wrong to charge Ku De Ta Bali for these expenses simply because Chondros may have taken the opportunity to look at a restaurant site as well as a matter of curiosity. Other evidence in the case indicated that he was not really interested in developing the Ku De Ta brand in the Middle East.
[98] It appears to me that the trips described in [95] and [96] above were likely to have been to discuss expansion opportunities and therefore, in the light of Nine Squares’ position in relation to the ownership of the Singapore Marks, should not have been charged to Ku De Ta Bali although perhaps at least part of Kevin Elkha’s expenses were properly so charged since he was advising Ku De Ta Bali on its website. However, even if Nine Squares did not repay or reconcile these expenses with Ku De Ta Bali, it is a stretch to find that its failure to do so indicated that it was holding the Singapore Marks on trust for Ku De Ta Bali. It is equally possible that the wrongful charges were either accidental because Ellaway was careless in his accounting or that he deliberately took advantage of Ku De Ta’s funds because he knew that Nine Squares was unlikely to be questioned regarding airfares and expenses for Chondros and himself in view of the services that Chondros and Nine Squares rendered Ku De Ta Bali. In this respect, I should say that Chondros and Nine Squares were given great latitude in the running of Ku De Ta Bali. Although there was an accounts department in the business which was staffed by local employees who were considered in Bali to be Kadek’s employees, the evidence was that these employees generally took instructions from Chondros when it came to preparing vouchers and that when the same were presented to Kadek for signature, he signed them without much scrutiny.
Collins’ acquisition of Chondros’ stake
[100] I cannot understand why the plaintiffs submit that the way in which Collins acquired Chondros’ stake and the understanding that Collins, his father, Graham Collins, and that of the Collins family accountant, one Neville Beckhurst, had of the arrangements between Ku De Ta Bali and Nine Squares, support their arguments regarding the trust arrangement.
[101] Collins had, as mentioned, bought a part of Chondros’ stake in the partnership through WH Trading in April 2009. At the time he did so, Collins knew that the Ku De Ta brand was internationally renowned and the plaintiffs’ position is that he thought that by acquiring a share in Ku De Ta Bali, he was buying into the brand and associated goodwill, including goodwill beyond Indonesia. The plaintiffs rightly concede that Collins’ subjective views of what he thought he was buying into did not change what Ku De Ta Bali did in fact own.
[102] The plaintiffs argue that Chondros had told Collins that purchase of his equity stake would be a good business deal because of the potential for expansion of the “KU DE TA” brand. However, in cross-examination, Collins agreed that Chondros did not tell him that he would be buying rights in the Ku De Ta name and further agreed that he had taken that “for granted”. Further, when he was charged with investigating the position, Neville Beckhurst made some email enquiries of Chondros and these were responded to on 16 December 2008 by Ellaway. In that email, Ellaway stated:
[103] The plaintiffs submit that notwithstanding this statement, Neville Beckhurst assumed that Nine Squares held the trade marks on behalf of the Ku De Ta Bali partners because:
(a) He understood the second paragraph quoted above to mean that the Ku De Ta partners had the right to participate in any brand expansion, and considered that this could only be because the partners had rights to the “Ku De Ta” brand.
(b) He thought that the partners might have decided to put the trade marks in a company’s name instead of in their own names for tax reasons.
(c) He thought that the partners might have had to use a company to hold the trade marks because of legal requirements.
[104] There are two objections to this. First of all, an assumption cannot prove an intention. Second, in cross-examination, Neville Beckhurst admitted that the reasoning by which he had made that assumption was completely circular. It took some effort to get that admission out of Neville Beckhurst as he had a tendency to prevaricate and had to be directed to give straight answers. Nothing in Neville Beckhurst’s evidence can explain how he concluded that the plaintiffs owned the KU DE TA Marks when he had been told explicitly by Ellaway that they belonged to Nine Squares.

The judgment continues past this page. Read the rest at eLitigation.

Guy Neale and others v Nine Squares Pty Ltd

Laws this judgment relies on

Grounds of decision

Introduction

Background facts

The founding of Ku De Ta Bali

Managing Ku De Ta Bali

Registration of the name “KU DE TA”

Entry of new partners

Dispute between Chondros and Ellaway

Chondros’ unsuccessful attempt to expand overseas

Licence agreement for the 1st Singapore Mark

Second Singapore trade mark registration

The formation of KDTSG

The Australian court proceedings

The plaintiffs commence proceedings in Singapore

The issues

(a) Who owns the name/mark “KU DE TA” and its associated goodwill?

(c) Are the Singapore Marks held by Nine Squares on trust for the plaintiff?

(a) Prior to the registration of the 1st Singapore Mark who, if anyone, owned the name/mark “KU DE TA”?

(b) Does Nine Squares hold the Singapore Marks on an express trust for the plaintiffs?

(d) Should the registration of the Singapore Marks be invalidated under s 23 of the TMA?

The ownership of the name/mark KU DE TA

Express trust

The law

Submissions and analysis

Discussions between Chondros and the partners regarding overseas expansion of Ku De Ta

Discussions between Chondros and Kotzamichalis, and Chondros and Kadek, on the registration of KU DE TA Marks overseas

The 29 June 2007 meeting and the 6 July 2007 email memorandum

Neale’s discussion with Lachlan Gyde

Expenses for exploring expansion opportunities charged to Ku De Ta Bali

Collins’ acquisition of Chondros’ stake