Court of Appeal · Decided 22 December 2014

Guy Neale and others v Nine Squares Pty Ltd

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[2014] SGCA 64Case no. Civil Appeal No 172 of 2013 and Summons No 2011 of 2014

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Sundaresh Menon CJ (delivering the judgment of the court):
Introduction
[1] Ku de Ta is a well-known restaurant, bar and club in Bali (“Ku De Ta Bali”) that has been owned and operated as a partnership ever since it was set up. The current members of the partnership (“the Partnership”) are the six appellants in this appeal, Civil Appeal No 172 of 2013 (“this appeal”), who are also the appellants in the related appeal, Civil Appeal No 171 of 2013 (“CA 171”). Four of the appellants were involved in conceptualising, developing and eventually launching Ku De Ta Bali. Its success prompted one of them to pursue ventures under the name “Ku De Ta” (“the ‘Ku De Ta’ name”). (There are variants in the form and the font of this name, with all the letters capitalised in some instances; but nothing turns on this, and for convenience, we have generally adopted the spelling “Ku De Ta” in this judgment.) At some stage, two trade marks bearing the “Ku De Ta” name were registered in Singapore, with the respondent in this appeal, Nine Squares Pty Ltd (“Nine Squares”), named as the registered proprietor of these two marks (“the Singapore Marks”). Nine Squares subsequently licensed the use of one of the Singapore Marks to a third party, who in turn assigned his right to use that mark to the respondent in CA 171, Ku De Ta SG Pte Ltd (“KDTSG”).
[2] This appeal, which arises from Suit No 314 of 2011 (“Suit 314”), and CA 171, which arises from Suit No 955 of 2010 (“Suit 955”), are ultimately concerned with the ownership and the use of the Singapore Marks. CA 171 deals with the rights of KDTSG as the assignee of the licence for the use of one of the Singapore Marks. KDTSG’s rights could be affected by our determination in this appeal because its rights may depend in the first place on the rights of its assignor, whose rights in turn depend on the rights of the licensor, Nine Squares. For this reason, although we heard this appeal and CA 171 together, we only deal with this appeal in this judgment. We have yet to determine CA 171, and we shall hear the parties to that appeal further, in the light of this judgment, before making our ruling there.
[3] The central issue in this appeal is whether Nine Squares, the registered proprietor of the Singapore Marks, is in fact holding these marks on trust for the Partnership. If that is not the case, then a further issue arises as to whether the registration of the Singapore Marks should be invalidated. The judge in the court below (“the Judge”) ruled that these marks were not held by Nine Squares on trust for the Partnership, and that their registration should not be invalidated. She thus dismissed the appellants’ claim in Suit 314 (see Guy Neale and others v Nine Squares Pty Ltd [2013] SGHC 249 (“the 1st Judgment”)). In view of her decision in Suit 314, the Judge also dismissed the appellants’ claim against KDTSG in Suit 955 (see Guy Neale and others v Ku de Ta SG Pte Ltd [2013] SGHC 250 (“the 2nd Judgment”)).
The background
[4] It will be helpful if we begin with a brief history of the proceedings and the parties involved so as to understand the context of this appeal and CA 171 as well as the issues that they give rise to.
The parties
[5] As mentioned earlier, the appellants in this appeal and CA 171 are the same. They are the current members of the Partnership. The original members of the Partnership were: (a) the first appellant, Guy Neale (“Neale”); (b) the second appellant, Aki Kotzamichalis (“Aki”); (c) the third appellant, Made Wiranatha (“Kadek”); and (d) the fifth appellant, Arthur Chondros (“Chondros”). The fourth appellant, White Horses Trading Company Limited (“WH Trading”), and the sixth appellant, White Horses Investments Limited (“WH Investments”), came into the picture only later.
[6] Although Suit 314 and Suit 955 were brought in the name of the Partnership, Chondros is a dissenting partner in relation to the proceedings and he in fact gave evidence for Nine Squares at the trial. The submissions of the appellants in the court below and before us were accordingly made on behalf of only the first to the fourth and the sixth appellants (ie, Neale, Aki, Kadek, WH Trading and WH Investments), and we shall, for convenience, hereafter refer to them collectively (excluding Chondros) as “the Appellants”. The Appellants and Chondros, as the current members of the Partnership, are also the current owners of Ku De Ta Bali.
[7] Nine Squares, the respondent in this appeal, was set up by Chondros in January 2003 as a public company in the State of Victoria, Australia, but has since been converted into a private company. At all material times until 16 February 2010, Nine Squares had two equal shareholders and directors, Chondros and Daniel Ellaway (“Ellaway”). On 16 February 2010, Ellaway resigned as a director of Nine Squares; and at the time of the trial, he was no longer a shareholder, Chondros was a minority shareholder and there was a new majority shareholder.
[8] KDTSG, the respondent in CA 171, is a Singapore company which uses the “Ku De Ta” name for the restaurant, bar, lounge and club which it operates at the Skypark at the Marina Bay Sands development (“Marina Bay Sands”) in Singapore. We shall hereafter refer to this business as “Ku De Ta Singapore”. KDTSG bases its right to use the “Ku De Ta” name on a licence agreement dated 29 June 2009.
[9] Suit 314 and Suit 955 were heard together before the Judge, and the evidence adduced at the trial was admitted in both suits.
The material facts
[10] The Judge set out the facts in detail in the 1st Judgment and we do not think it is necessary for us to repeat all of them here. We refer only to the more important facts that are material to the issues raised in this appeal.
Setting up Ku De Ta Bali
[11] The story began when Chondros located a site for development in Bali in April 1999. He thought this would be favourable for use as a high-end dining destination. He approached Kadek, a successful Indonesian businessman with an interest in the food and entertainment sectors including restaurants and clubs. Kadek helped Chondros to acquire the lease of the land. Chondros then sought two other investors. This is how Aki and Neale came to be involved. The “Ku De Ta” name was the brainchild of Chondros. A trade mark of that name was registered in Indonesia in Class 42 (restaurants, etc) on 20 March 2001 as Indonesian Trade Mark No 469240 (“the Indonesian Mark”), with Kadek named as the registered proprietor.
[12] In February 2000, Chondros, Kadek, Aki and Neale (hereafter referred to collectively as “the Founders” where appropriate to the context) entered into an agreement entitled “Heads of Agreement” (“the 2000 HOA”). After some adjustments in 2001, the equity interest in Ku De Ta Bali was owned in the following proportions: Neale owned 31%; Kadek, 30%; Chondros, 26.5%; and Aki, 12.5%.
[13] It was agreed, under the terms of the 2000 HOA, that Chondros would manage the daily operations of Ku De Ta Bali. In late 2002, Chondros enlisted Ellaway to assist him in this regard. As noted above, in January 2003, Chondros incorporated what later became Nine Squares. Subsequently, in July 2003, the Founders agreed that since Chondros was to continue acting as the manager of Ku De Ta Bali, he would be paid a management fee instead of a salary as had originally been agreed under the terms of the 2000 HOA. Although it was proposed by Chondros and Ellaway at various times that Nine Squares be engaged as Ku De Ta Bali’s management company, Neale, Kadek and Aki (collectively, “the other Founders”) refused. As far as they were concerned, Chondros would remain as the manager of Ku De Ta Bali, although they did not object to Chondros using Nine Squares to help him as he deemed fit in relation to the running of Ku De Ta Bali.
Registration of “Ku De Ta” trade marks
[14] As mentioned above, on 20 March 2001, the Indonesian Mark was registered in Kadek’s name.
[15] Sometime around October 2002, Chondros asked Ellaway to register the “Ku De Ta” name as a trade mark in Australia. This was done on 17 October 2002 in both their names. On 29 January 2004, Chondros and Ellaway assigned that trade mark (“the Australian Mark”) to Nine Squares. The other Founders claimed that they were not aware of these developments at the time and there is no reason to disbelieve them.
[16] Various other “Ku De Ta” trade marks were registered overseas from 2004 onwards in the name of Nine Squares (these marks will hereafter be referred to as “Overseas Marks”). On 16 February 2004, on the basis of the Australian 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 Singapore Trade Mark No T0405181Z (“the 1st Singapore Mark”) with effect from 16 February 2004, with Nine Squares reflected as the registered proprietor. Again, the other Founders said that they did not know about this at the time.
[17] At some point before June 2007, Chondros separately told Aki and Kadek that he had registered a number of Overseas Marks. Chondros also told Neale, sometime after 29 June 2007, that he had incurred expenses for the registration of these Overseas Marks.
[18] 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 (“the 2nd Singapore Mark”) with effect from 30 June 2009, with Nine Squares named as the registered proprietor. The 1st Singapore Mark and the 2nd Singapore Mark collectively make up the Singapore Marks mentioned at [1] above. They are the subject matter of this appeal and are also part of the Overseas Marks.
Involvement of WH Trading and WH Investments
[19] In the second half of 2008, a gentleman named Gary Collins (“Collins”) agreed to purchase 10% of Ku De Ta Bali from Chondros for US$700,000. Collins made the acquisition through his corporate vehicle, WH Trading.
[20] Before Chondros assigned a portion of his shares in Ku De Ta Bali to WH Trading, the Founders re-executed the 2000 HOA in April 2009 with some minor changes. This was done in order to spell out the Founders’ rights to review the management of Ku De Ta Bali, capital expenditure in excess of US$10,000 and the hiring of expatriate staff. The shareholding stated in the re-executed agreement was the same as that stated in the 2000 HOA (see [12] above). Chondros subsequently assigned 10% of his stake in Ku De Ta Bali to WH Trading by way of a deed of assignment dated 7 April 2009.
[21] In 2010, Collins paid US$600,000 to acquire a further 6.5% of Ku De Ta Bali from Chondros by way of a deed of assignment dated 20 August 2010. On this occasion, Collins used another corporate vehicle, WH Investments, to undertake the acquisition. WH Investments subsequently acquired a further 4% stake in Ku De Ta Bali from Chondros in August 2011 after he failed to repay a loan.
[22] As a result of these changes, the ownership of Ku De Ta Bali as at August 2011 was as follows: Neale owned 31%; Kadek, 30%; Chondros, 6%; Aki, 12.5%; WH Trading, 10%; and WH Investments, 10.5%.
Breakdown of relations between Chondros and Ellaway
[23] Sometime in 2009, the relationship between Chondros and Ellaway soured. Chondros suspected that Ellaway was siphoning money from Ku De Ta Bali through the alteration or forgery of suppliers’ invoices. In May 2009, Chondros confronted Ellaway. Dissatisfied with the explanations that Ellaway put forward, Chondros told Ellaway that Nine Squares could not continue to be involved in managing Ku De Ta Bali if Ellaway engaged in such misconduct. (At the trial, Ellaway admitted that he had altered suppliers’ invoices to show amounts that were more than what had actually been billed.)
[24] On 24 June 2009, Chondros emailed Ellaway asking for various accounts and books relating to Nine Squares and Ku De Ta Bali, as well as a list of any obligations Ellaway had purported to enter into on behalf of Nine Squares. Chondros was insistent that Ellaway “should not enter into any agreements or incur any expenditure without [Chondros’] express written consent”.
[25] Five days later, on 29 June 2009, without Chondros’ knowledge, Ellaway caused Nine Squares to enter into the licence agreement mentioned at [8] above with one Chris Au (“Au”), under which Nine Squares purported to license to Au the use of the 1st Singapore Mark within Singapore. Au was a businessman who intended to use the “Ku De Ta” name for a restaurant in Singapore. Subsequently, on 23 November 2009, Au assigned his rights under his licence agreement with Nine Squares (“the Licence Agreement”) to KDTSG, which currently operates Ku De Ta Singapore. Although Chondros only found out about the Licence Agreement in February 2010, he had already earlier suspected that Ellaway might have considered causing Nine Squares to enter into overseas ventures under the “Ku De Ta” name. Chondros had thus started sending letters to various personnel in Marina Bay Sands’ Retail Development Unit (“MBS’s personnel”) and to Ellaway disputing the latter’s right to cause Nine Squares to enter into such ventures. After Chondros found out about the Licence Agreement, he sent further letters to Ellaway and MBS’s personnel expressing similar sentiments specifically in relation to the Licence Agreement. As mentioned earlier, Ellaway eventually resigned as a director of Nine Squares on 16 February 2010.
[26] In April 2010, KDTSG and Au commenced legal proceedings in Victoria, Australia, against Nine Squares seeking, among other things, a declaration that the Licence Agreement was valid (“the Australian proceedings”). On 9 July 2010, the Australian proceedings were settled. The settlement deed between KDTSG, Au and Nine Squares, which was signed on Nine Squares’ behalf by Chondros and Justin Todd (“Todd”), another director of Nine Squares, affirmed the Licence Agreement with slight variations.
Proceedings in Singapore by the Partnership
[27] In September 2010, KDTSG opened Ku De Ta Singapore. In December 2010, the Partnership commenced Suit 955 against KDTSG for, among other things, an order to enjoin the latter from using “the name/mark ‘Ku De Ta’” (“the ‘Ku De Ta’ name or mark”) and damages for passing off. As mentioned earlier, this suit was dealt with by the Judge in the 2nd Judgment and is the subject matter of CA 171. In 2011, the Partnership started another action, this time against Nine Squares, by way of an originating summons that was subsequently converted to Suit 314. This suit, as we similarly noted earlier, was dealt with by the Judge in the 1st Judgment and is the subject matter of this appeal. In Suit 314, the Partnership sought a declaration that the Singapore Marks were held by Nine Squares on trust for the Partnership and should be transferred to it; alternatively, the Partnership contended that the registration of the Singapore Marks ought to be invalidated. Further, the Partnership sought an account of the profits made by Nine Squares from the use and/or the licensing of the use of the Singapore Marks. Nine Squares’ defence was, in essence, that the Singapore Marks were beneficially owned by it and were not held on trust for the Partnership.
The Judge’s decision
[28] The Judge dealt with the issues in Suit 314 in the following manner:
(a) the ownership of the “Ku De Ta” name or mark prior to the registration of the 1st Singapore Mark;
(b) whether Nine Squares held the Singapore Marks on an express trust for the Partnership;
(c) If it did not, whether Nine Squares held the Singapore Marks on a constructive trust for the Partnership; and
(d) if it did not, whether the registration of the Singapore Marks should be invalidated under s 23 of the Trade Marks Act (Cap 332, 2005 Rev Ed) (“the TMA”).
Ownership of the “Ku De Ta” name or mark
[29] The Judge first considered the ownership of the “Ku De Ta” name or mark in the period between 1999 and 2004. It would be useful to digress at this point to clarify precisely what this means. A business will have a name and there can be goodwill in its name. Our attention was drawn to the observations of Laddie J in Ball v Eden Project Ltd [2002] 1 BCLC 313 (“Ball v Eden”), where he said at [20]:
On facts that were somewhat similar to those in the present proceedings, Laddie J went on to observe at [24]:
[30] The Judge considered that the starting point for determining whether the Founders had “rights of ownership inter se in respect of the ‘[Ku De Ta]’ name/[the] Indonesian Mark” was to be found in the terms of the 2000 HOA (at [52] of the 1st Judgment); but she also went on to consider the conduct of the Founders as she did not think that the 2000 HOA was a complete record of their agreement (at [59]). The Judge held that the 2000 HOA was meant to be the basis on which the Founders would form a partnership to carry out the business of constructing and operating a restaurant in Bali under the “Ku De Ta” name (at [54]). The “rights” of the Founders , as set out in cl 3(d) of the 2000 HOA, referred to “partnership property” and would cover “the name ‘[Ku De Ta]’ plus any goodwill attached to the name as a result of the successful operation of [Ku De Ta Bali]” (at [55]). After all, the Judge reasoned, the “Ku De Ta” name and the goodwill attached thereto would be the most valuable asset of the Partnership after 20 years of successful operation of Ku De Ta Bali, by which time the lease of the land would have expired and become valueless (at [55]). This also meant that the Indonesian Mark was partnership property. Notably, the Judge wrote at [57]:
The Judge thus rejected the assertions in Nine Squares’ defence that (among other things): (a) “the name and the brand of [Ku De Ta Bali] should belong only to … Chondros”; and (b) the Founders were in a “business venture” rather than a partnership (at [57] and [61] respectively). The Judge found that the Founders were to operate Ku De Ta Bali as a partnership, and accordingly, Chondros owed fiduciary duties to the other Founders.
Establishing an express trust
[31] The Appellants argued that the Partnership had the exclusive right to use and license the use of the “Ku De Ta” name. Therefore, Nine Squares must have registered the Singapore Marks for and on behalf of the Partnership, and thus held the Singapore Marks as well as the profits derived from their use and/or the licence of their use on an express trust for the Partnership. To make good this argument, the Appellants had to show that Nine Squares intended to hold the Singapore Marks on trust for the Partnership when the Singapore Marks were registered, and that the three certainties of intention, subject matter and objects of the trust were present.
[32] As Nine Squares is the legal owner of the Singapore Marks, the Judge considered the question of whether it had the intention to establish an express trust over these marks by considering the words and conduct of Ellaway and Chondros. The Appellants relied on the facts and circumstances listed at [75] of the 1st Judgment as their basis for arguing that an express trust over the Singapore Marks had been created. The Judge rejected this and held that the evidence was not sufficient to justify the conclusion that Nine Squares had an intention to create an express trust over the Singapore Marks (at [139]). The Judge’s analysis of the evidence will be dealt with when we analyse the merits of the Appellants’ submissions on this aspect of the 1st Judgment.
Establishing an institutional constructive trust
[33] At the hearing below, the Appellants also argued in the alternative that the court should impose an institutional constructive trust in respect of the Singapore Marks as Chondros had breached the fiduciary duties which he, as a member of the Partnership, owed to the Appellants. Two grounds were relied on: that Chondros had usurped a corporate opportunity belonging to the Partnership, and that he had misappropriated partnership property.
[34] The Judge found that Chondros had not misappropriated partnership property by causing Nine Squares to register the Singapore Marks in its name because Ku De Ta Bali had no goodwill in Singapore as at February 2004 when the 1st Singapore Mark was registered (at [161] of the 1st Judgment). While there was “some goodwill in Singapore on 30 June 2009 [the date of registration of the 2nd Singapore Mark] for Ku De Ta as a restaurant” [emphasis added], there was none for “Ku De Ta”-branded apparel, jewellery or music (the items in the two classes under which the 2nd Singapore Mark was registered) at that date (at [172]).
[35] The Judge also found that Chondros had not usurped a corporate opportunity belonging to the Partnership as there was no “real or substantial possibility” of the Partnership setting up a “Ku De Ta”-named operation in Singapore when the 1st Singapore Mark and the 2nd Singapore Mark were registered in 2004 and 2009 respectively (at [181]).
[36] Thus, the Judge found that the Appellants had failed to prove that an institutional constructive trust should be imposed in respect of the Singapore Marks as Chondros had not breached his fiduciary duties to the Appellants in procuring Nine Squares to register those marks in its name.
Invalidation of the registration of the Singapore Marks
[37] Next, the Judge considered whether the registration of the Singapore Marks was to be invalidated on the grounds that there was an earlier trade mark, or that there was passing off, or that registration had been applied for in bad faith.
[38] The Judge found that the Indonesian Mark was not well known in Singapore at the time of the registration of the Singapore Marks and could not be said to be an “earlier trade mark” within the meaning of the TMA (at [198] and [204] of the 1st Judgment). In respect of the claim based on passing off, the Judge held that it was unsustainable given her earlier finding that there was “no substantial goodwill” attached to the “Ku De Ta” name or mark in Singapore at the time the 1st Singapore Mark was registered in 2004, and only some goodwill (but limited to Ku De Ta Bali as a restaurant) at the time the 2nd Singapore Mark was registered in 2009 (at [212]). As for invalidation of the registration of the Singapore Marks on the basis that registration had been applied for in bad faith, the Judge held that bad faith had not been established in view of her earlier finding that: (a) there was no misappropriation of partnership property; (b) there was either no or, at best, only limited goodwill attached to the “Ku De Ta” name or mark in Singapore at the time the Singapore Marks were registered; and (c) Chondros had not breached the fiduciary duties which he, as a member of the Partnership, owed to the Appellants (at [218]).
The Judge’s ruling on Suit 314 and Suit 955
[39] The Judge therefore dismissed the Partnership’s claim in Suit 314. Given the nature of their submissions in that suit, the Appellants accepted that if that suit were dismissed, the Partnership would have no basis on which to proceed with its action in Suit 955. Hence, the Judge dismissed the Partnership’s action in Suit 955 as well.
The Partnership’s applications for leave to adduce new evidence on appeal
[40] In connection with CA 172, Summons No 2011 of 2014 was filed by the Partnership for leave to adduce further evidence before this court. The evidence in question was the affidavit of Ho Ching Yi Elsa (“Ho”) filed on 5 February 2014 in Suit No 153 of 2014 (“Suit 153”). In connection with CA 171, Summons No 2010 of 2014 was filed by the Partnership in relation to the same affidavit (“Ho’s affidavit”). Both Nine Squares and the respondent in CA 171 (collectively, “the Respondents”) objected to the Partnership’s applications.
[41] Shortly after signing the settlement deed in respect of the Australian proceedings, Chondros began divesting his shareholding in Nine Squares to a company called Templetrees Ltd (“Templetrees”). At the trial, Chondros testified that he sold 30% of his shares in Nine Squares to Templetrees for $500,000. In June 2011, Ellaway transferred his shares in Nine Squares to Templetrees. By 15 May 2012, Templetrees owned 79% of Nine Squares while Chondros owned 11%, with one of Chondros’ companies owning the remaining 10%.
[42] The Appellants believed or at least suspected that Au had offered Chondros a stake in KDTSG on the basis of which the Australian proceedings would be settled and Chondros would then throw in his lot with Au in the present proceedings. As part of this hypothesis, the Appellants believed that the people behind KDTSG had acquired the controlling stake in Nine Squares, and that Chondros had agreed that he would contend at the trial that the 1st Singapore Mark was not held on trust for the Partnership but was beneficially owned by Nine Squares. To establish this hypothesis, the Appellants sought to prove that the persons controlling KDTSG were also controlling Templetrees, which had become the majority shareholder of Nine Squares by the time of the trial.
[43] According to Ho’s affidavit, as at 29 January 2014, Chondros was holding a 2% beneficial interest in a company called Retribution Limited. In turn, Retribution Limited held a 72.5% share in Kudeta Limited, which fully owned KDTSG and Templetrees. Templetrees had a 79% share in Nine Squares. Therefore, Chondros had at least an indirect ownership interest in KDTSG through his interest in Retribution Limited and, in turn, Kudeta Limited. According to the Appellants, the inference to be drawn from Ho’s affidavit was that Chondros had indeed been induced to join forces with Au and his associates following the settlement of the Australian proceedings, and to this end, he had swapped his interest in Nine Squares for an interest upstream in Retribution Limited, the majority shareholder of Kudeta Limited. As Kudeta Limited, which controlled KDTSG, also controlled Nine Squares (through Templetrees), this explained why Chondros, on behalf of Nine Squares, had stated in the present proceedings that the Singapore Marks were not held on trust for the Partnership despite having sworn an affidavit to the contrary in the Australian proceedings.
[44] The admissibility of new evidence after a trial is governed by the well-known principles laid down in Ladd v Marshall [1954] 1 WLR 1489 (“Ladd v Marshall”). Based on these principles, in order for the Partnership to succeed in its applications for leave to adduce Ho’s affidavit as new evidence, the Appellants have to prove that that affidavit: (a) could not have been obtained with reasonable diligence for use at the trial; (b) would likely have had an important influence on the outcome of Suit 314 and Suit 955; and (c) is apparently credible even if it is not incontrovertible. Counsel for the Respondents, Mr Cavinder Bull SC (for Nine Squares in this appeal) and Mr Low Chai Chong (for KDTSG in CA 171), did not dispute that Ho’s affidavit could not have been obtained with reasonable diligence for use at the trial, but took issue with the latter two limbs of the rule in Ladd v Marshall and challenged both the veracity as well as the relevance of Ho’s affidavit.
[45] We agree with the Respondents’ objections to the admission of Ho’s affidavit as new evidence for several reasons, which we shall turn to momentarily. In coming to this conclusion, we considered Ho’s affidavit on its own rather than in the context of all the other evidence in the case. On this basis, we turn to our reasons. First, Ho’s affidavit related to matters that, at best, reflected a position almost one and a half years after the trial, and thus, was not necessarily reflective of the status of the ownership of Nine Squares at the time of the trial. There was a significant gap in time between the new evidence set out in Ho’s affidavit and the evidence adduced at the trial. The Appellants were seeking to infer from the new evidence in Ho’s affidavit that (among other things) what Au and Chondros had said at the trial about their respective ownership interests in Templetrees (the majority shareholder of Nine Squares) and KDTSG was incorrect, but this required a significant leap, given the lack of evidence covering the gap in time.
[46] Secondly, and more importantly, there were errors in Ho’s affidavit that made it less credible. Ho’s affidavit stated that as at 31 December 2013, the following individuals, through their respective shareholdings in Retribution Limited, had an indirect ownership interest in Kudeta Limited as follows: Au and Ho had a 45.5% interest; Chondros and Todd, a 5% interest; and a company, Rocky Cape International Limited, a 22% interest. Another company, Essence Investments Limited, owned the remaining 27.5% of Kudeta Limited. Chondros disputed his alleged interest in Retribution Limited as at 31 December 2013 on the basis that he had acquired that interest only in January 2014 in return for having earlier transferred his shares in Nine Squares to Templetrees. This was corroborated by Todd, who likewise stated that he had acquired an interest in Retribution Limited on the same basis. Both Chondros and Todd relied on a share certificate which showed that Templetrees had acquired shares in Nine Squares on 28 January 2014. The Appellants were unable to dispute this.
[47] Thirdly, the veracity of the allegations contained in Ho’s affidavit was challenged by the Respondents, who questioned whether Ho had personal knowledge of the matters deposed to, and hence, whether her affidavit satisfied O 41 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed). Moreover, shortly after Ho’s affidavit was filed, Suit 153 was withdrawn, and as a result, the new evidence in that affidavit was never tested under cross-examination.
[48] There was not much that Mr Ang Cheng Hock SC, counsel for the Appellants, could raise to rebut these points. In all the circumstances, we are satisfied that the new evidence in Ho’s affidavit does not satisfy the second and third limbs of the rule in Ladd v Marshall, and we therefore dismiss both applications for leave to adduce further evidence. Against that background, we turn to the issues in this appeal.
The issues on appeal
[49] In this appeal, the Appellants are challenging almost the entirety of the Judge’s decision in Suit 314. We shall elaborate on the Appellants’ arguments in the course of our discussion of the issues before us, which are as follows:
(a) whether Nine Squares held the Singapore Marks on an express trust for the Partnership;
(b) in the alternative, whether Nine Squares held the Singapore Marks on a constructive trust for the Partnership; and
(c) if (and only if) the first two issues are both answered in the negative, then whether the registration of the Singapore Marks should be invalidated under s 23 of the TMA.
Whether an express trust was established
Basic principles
[50] We first set out the basic principles on the creation of an express trust. An express trust is created by the actual intention of the settlor; the intention may be apparent from the express use of the word “trust” in the relevant instrument or inferred from the settlor’s words or conduct (see Snell’s Equity (John McGee gen ed) (Sweet & Maxwell, 32nd Ed, 2010) (“Snell’s Equity”) at para 21-018).
[51] Three certainties must be present for the creation of an express trust: certainty of intention; certainty of subject matter; and certainty of the objects of the trust.
[52] The first certainty, that of intention, requires proof that a trust was intended by the settlor. The principle is that in what was said or done by the settlor, there must be clear evidence of an intention to create a trust (see Paul v Constance [1977] 1 WLR 527 (“Paul v Constance”) at 531). No particular form of expression is necessary. In particular, Snell’s Equity notes that it is unnecessary for the settlor to use the word “trust” before such an intention can be found (at para 22-013), and goes on to say in the same paragraph:
[53] The same point was also made in Tito v Waddell (No 2) [1977] Ch 106 by Megarry VC at 211:
Therefore, there have been cases where an express trust was created by means of an informal declaration (as in Paul v Constance), or inferred from the acts of the settlor or the circumstances of the case (see Geraint Thomas & Alastair Hudson, The Law on Trusts (Oxford, 2nd Ed, 2010) (“The Law on Trusts”) at para 2.04; Alastair Hudson, Equity and Trusts (Routledge, 7th Ed, 2013) (“Equity and Trusts”) at pp 94–95). We consider three decisions of the latter category in some detail below as the principles that emerge from them inform our analysis of the evidence in this case.
[54] The first case is Re Kayford Ltd [1975] 1 WLR 279 (“Re Kayford”), which concerned a company that carried on a mail-order business where the customers either paid the full price in advance or paid a deposit. When the company faced financial difficulties, its solicitors advised it to set up a separate bank account into which all further moneys paid by customers for goods not yet delivered would be deposited and subsequently drawn from only when the goods had been delivered. The company accepted that advice and acted accordingly. Shortly thereafter, the company went into liquidation. The question before the court was whether the moneys in the bank account were held on trust for the customers who had paid those moneys, or whether they formed part of the company’s assets. Megarry VC had little difficulty in arriving at the conclusion that an express trust of the moneys in that bank account had been created. The advice to the company was to establish a separate account with its bank, and the purpose of doing so was to ensure that that the moneys deposited into that bank account remained in the beneficial ownership of the customers who had paid those moneys. Megarry VC noted that the customers were not creditors of the company as a trust had been created through the use of a separate bank account, the sole purpose of which was to hold the moneys paid by customers whose goods had yet to be delivered (at 282):
The intention to create an express trust was inferred in Re Kayford from the acts of the company, which showed that it intended to hold the moneys in question for the benefit of the customers who had paid those moneys.
[55] We note that the opposite result was reached on similar facts in Re Farepak Food and Gifts Ltd (in liquidation) [2010] 1 BCLC 444 (“Re Farepak”). The court’s reasoning in that case was that applying a trust analysis in the context of an insolvent company would entail conferring upon the customers concerned a preference over other creditors. The express trust analysis in Re Kayford was neither referred to nor applied. However, the court in Re Farepak did consider what the intention of the company was. The court found that an express trust had not been created because of the preference that would otherwise arise in the context of insolvency, but also noted that the parties had not properly argued this issue before it (at [52]). We do not presently have to deal with a situation of trusts arising in the context of insolvency. The point to be made is that in both Re Kayford and Re Farepak, the court did not hesitate to consider whether an express trust had been created based on the intentions of the company as manifested in its conduct.
[56] The next case is the English Court of Appeal’s decision in Re Chelsea Cloisters Ltd (In liquidation) (1981) 41 P & CR 98. There, a company had an underlease of some land from the landlord. When the company faced financial difficulties, a receiver was appointed, and he took steps to ensure that future deposits paid by tenants to the company were kept in a separate bank account from which reimbursements could be made to tenants. When the company went into liquidation, the question before the court was whether a trust had been created over those moneys or whether those moneys formed part of the general funds of the company. The court considered the inference to be drawn from the nature of the transaction by looking at the evidence of the receiver’s intentions in setting up the bank account and operating it in the manner that he did. The receiver made three statements in particular. First, he intended to keep the funds in that bank account separate from the general funds of the company. Second, he wanted to ensure that the tenants’ beneficial interest in the moneys in that bank account was preserved. Third, he regarded that bank account as available only for repaying deposits of tenants. The court was mindful that this was not a case where the receiver had expressly stated that a trust would be created (per Denning LJ at 101, Bridge LJ at 103 and Oliver LJ at 104); however, all three judges came to the unanimous conclusion that what was important was a close examination of the receiver’s intentions and what he had done by setting up the bank account for a specific purpose. From the evidence, the court was satisfied that a trust had been created over the moneys in the bank account.
[57] The last case of note is Don King Productions Inc v Warren [2000] Ch 291. There, two persons formed a partnership in which they agreed to share profits and losses as part of a business enterprise. It was not disputed that the partnership could enter into management agreements which would be partnership assets. The question before the court was whether management agreements entered into by one partner in his own name could be said to be held by that partner as a partnership asset. At first instance, Lightman J held that the benefits derived from the management agreements were held on an express trust for the partnership. The agreements themselves were non-assignable and thus could not have formed the subject matter of a trust. But, the court found, after construing the partnership agreements, that the parties intended the business of the partnership to include the exploitation of management agreements for the benefit of the partners, and that the parties had the freedom to contract to create trusts over the fruits of such agreements (at 316 and 321). Lightman J’s decision was subsequently upheld on appeal (at 337–339).
[58] The focus of the courts in the above cases was on whether it was possible and appropriate to infer an intention to create a trust by looking at evidence not only of the alleged settlor’s words and conduct, but also of the surrounding circumstances and the interpretation of any agreements that might have been entered into.
[59] The second certainty required for the creation of an express trust is certainty of subject matter. The trust must define with sufficient certainty the assets which are to be held on trust and the kind of interest that the beneficiaries are to take in them. The definition will be sufficiently certain if it enables the trustee or the court to execute the trust according to the settlor’s intention (see Snell’s Equity at para 22-016).
[60] The third certainty is certainty in the definition of the objects of the trust. The intended beneficiaries must be identifiable so that it is possible to ascertain those who have the standing to enforce the trustee’s duties under the trust (see Snell’s Equity at para 22-021).
[61] As to the three certainties in this appeal, the main contention between the parties before us lay in whether there was sufficient certainty of intention. The certainties of subject matter and of the objects of the alleged express trust were not in dispute: the subject matter was the exploitation of the “Ku De Ta” name through the registration of (among other Overseas Marks) the Singapore Marks, and the benefits to be derived from licensing the use of the Singapore Marks; while the objects of that trust were the members of the Partnership. The evidence adduced was directed essentially at proving or disproving that Nine Squares intended to hold the Singapore Marks and the benefits derived therefrom on trust for the Partnership. As Nine Squares acted through Chondros and/or Ellaway at the material times, the analysis centred largely on their words and actions.
[62] Before we turn to analyse the evidence, we reiterate the fact that the Judge found that “the [‘Ku De Ta’] name and goodwill, as it grew, would belong to the [P]artnership” (at [57] of the 1st Judgment). The question before the Judge was how this was affected, given the terms of the 2000 HOA; and as Ku De Ta Bali grew, how this applied in relation to (among other Overseas Marks) the Singapore Marks.
[63] The Judge undertook a detailed analysis of the evidence adduced by the Appellants and concluded that it did not support the conclusion that there was a clear and express intention on the part of Nine Squares to hold the Singapore Marks on trust for the Partnership.
The Judge’s findings
[64] We have already noted that the Judge was presented with a large number of circumstances on the basis of which she was asked to infer that Chondros, who was the prime mover of Nine Squares at the material times, intended Nine Squares to hold the Singapore Marks on trust for the Partnership. It is not necessary for us to rehearse each of these circumstances in this judgment because they are collated at [75] and analysed in detail at [79]–[138] of the 1st Judgment. Presented with this evidence, the Judge analysed each of these circumstances as discrete events and found that none of them in and of itself could support the conclusion that the Singapore Marks were held on trust for the Partnership. She also considered that where a given circumstance could give rise to more than one possible inference, the Appellants would not be able to rely on that circumstance to prove that the Partnership was the beneficial owner of the Singapore Marks if that circumstance could equally be consistent with Nine Squares’ beneficial ownership.
[65] We shall turn to the details of the evidence shortly, but we pause to observe that, perhaps, the most difficult part of the evidence from Nine Squares’ point of view was the testimony that Chondros had given in the Australian proceedings. The Judge found that Chondros had unequivocally asserted in those proceedings that the Overseas Marks, including the Singapore Marks, were intended to be held for the benefit of the Partnership (at [121] of the 1st Judgment). However, the Judge also found that Chondros’ affidavit evidence in those proceedings as to the Partnership’s “entitlement” to the benefits derived from the Overseas Marks had to be read in the light of Chondros’ personal quarrel with Ellaway at that time and his sustained wish for the other members of the Partnership to continue investing in new “Ku De Ta”-named ventures outside of Bali (at [122]). The Judge therefore concluded that Chondros could have been speaking of a desire for the other members of the Partnership to have a chance to invest in new “Ku De Ta”-named projects while at the same time denying Ellaway any benefits arising from the Singapore Marks and Ku De Ta Singapore (at [127]–[128]). Furthermore, the Judge found that Chondros’ usage of terms such as “trust”, “vesting” and “beneficial ownership” was “hopelessly confused” and did not display a proper understanding of the concept of trusts (at [129]–[130]).
[66] The Judge noted that Chondros subjectively believed that he was the owner of the “Ku De Ta” name, and that it was his efforts and ideas that had made Ku De Ta Bali successful; on this basis, he thought that he was entitled to keep the benefits of any “Ku De Ta”-named enterprise to himself, save to the extent that he wished and chose to share those benefits with others. On this basis, the Judge concluded that the statements made by Chondros in the Australian proceedings were not sufficient to evidence the intention to create an express trust over the Singapore Marks.
[67] While the Judge’s analysis of the evidence might fairly reflect one view of how Chondros’ evidence in the Australian proceedings could be interpreted, in our judgment, it is necessary to go further and examine, in the light of all the circumstances, which of the following scenarios is more probable:
(a) that Chondros was being truthful in the statements which he made in the Australian proceedings at a time when he was locked in a battle with Au and KDTSG, who were seeking to enforce the Licence Agreement against Nine Squares; or
(b) that Chondros was being truthful in the proceedings before the Judge, and satisfactorily and candidly explained why he had said the opposite in the Australian proceedings.
[68] Against that background, we turn to the crux of the Appellants’ case as to whether Nine Squares held the Singapore Marks on an express trust for the Partnership. We set out our further analysis in four sections as follows:
(a) the 2000 HOA;
(b) the events after 2003;
(c) the email memorandum of 6 July 2007 (“the Email Memorandum”) and the surrounding circumstances; and
(d) the Australian proceedings.
[69] In analysing these matters, the question, as we have already said, is whether, on the totality of the evidence, it was clear that Nine Squares intended to hold the Singapore Marks on trust for the Partnership.
Our analysis
The 2000 HOA
[70] We begin with the 2000 HOA. At the time this agreement was signed, the only members of the Partnership were the Founders. We shall thus refer specifically to the Founders in this section of our judgment, but it should be remembered that we are referring to them collectively as the Partnership as it stood at that time.
[71] Clause 13 of the 2000 HOA provided that it was governed by the laws of the State of Victoria, Australia, and all the parties accepted that this was its proper law. The Appellants’ Victorian law expert, Mr Raymond A Finkelstein QC (“Mr Finkelstein”), testified that the 2000 HOA was an incomplete record of the Founders’ rights and obligations, and it was therefore necessary to consider the conduct of the Founders and all the surrounding circumstances. Where the written agreement was not a complete record of what had been agreed, the court would have to infer whether and, if so, what other terms had been agreed to by the Founders based on their conduct. The Judge accepted this and went on to examine the Founders’ conduct, and eventually held, as we have noted above, that although it was not stated in the 2000 HOA as a term, the “Ku De Ta” name and the corresponding goodwill were the property of the Founders (as the members of the Partnership) in the period from 1999 to 2004 (at [57] of the 1st Judgment).
[72] The 2000 HOA defined “The Business” in cl 1(1) to mean “the restaurant business named ‘Ku De Ta’ to be carried out in Bali, Indonesia”. On the basis of those clauses in the 2000 HOA which referred to “the business”, it seems clear that the term “the business” pertained to the setting up and operation of Ku De Ta Bali specifically, and not explicitly to other “Ku De Ta”-named ventures that might be established. This is unsurprising since in 2000, there was not yet a specific expectation to expand “the business” overseas. But, this is not decisive of the issue.
[73] Mr Finkelstein said in his second affidavit filed on 28 June 2012 that a business was rarely static, and that certain aspects of the business, including the types of activities undertaken, might change and so vary the partnership agreement setting out the basis on which the relationship between the owners of that business was to be regulated. Hence, while the 2000 HOA was not entered into with a specific intention that extended beyond Ku De Ta Bali, this did not preclude the prospect of the Founders either explicitly or implicitly extending the coverage of the 2000 HOA or even varying it. It is true that the 2000 HOA was updated in 2009 without any change in the definition of “the business”, but this does not preclude the conclusion that the Founders intended that there would be shared involvement in any new “Ku De Ta”-named ventures and that they would all benefit from the exploitation of the “Ku De Ta” name in the future. Mr Finkelstein’s evidence was to the effect that it would be necessary to consider the sequence of events from 2000 onwards to see whether the Founders contemplated that the scope of the rights and obligations under the 2000 HOA would extend to any new “Ku De Ta”-named ventures, or whether there was a separate or supplemental agreement.
The events after 2003
[74] The Judge referred at [79]–[83] of the 1st Judgment to various discussions which one or more members of the Partnership and/or Ellaway had with third parties between 2003 and 2009 concerning the possibility of establishing businesses using the “Ku De Ta” name in various other locations. (The Partnership likewise consisted of only the Founders during this period.) The Judge concluded that these discussions were ultimately irrelevant to the Appellants’ case because:
(a) most of the discussions were conducted by Chondros or Ellaway, with the other Founders being largely unaware of the discussions;
(b) Nine Squares represented itself as the owner of the Overseas Marks (including the Singapore Marks) in these dealings with outsiders;
(c) Chondros and Ellaway only kept the other Founders informed or involved if one of the other Founders had referred the business prospect to them; and
(d) Chondros in any event always kept in mind that the other Founders were prospective investors for future possible “Ku De Ta”-named projects.
[75] At [135]–[138] of the 1st Judgment, the Judge also touched on the behaviour of Nine Squares in so far as it consistently told third parties that it was the owner of the Overseas Marks. She noted that the Appellants could have disputed Nine Squares’ assertion of ownership, but had not done so.
[76] We consider the significance of these events in the context of the next section.
The Email Memorandum of July 2007 and the surrounding circumstances
[77] The Overseas Marks were mostly registered by Nine Squares in the period between 2004 and 2007. On 25 May 2007, Ellaway sent an email to the other Founders, copied to Chondros. In that email, Ellaway sought to clarify “rumours” that there would be a “Ku De Ta”-named business opening in Singapore, and went on to state that Overseas Marks had been registered by Nine Squares in more than 35 countries, but that no rights of usage had been given “to any other person or entity whatsoever”. Sometime before June 2007, Chondros separately told Aki and Kadek that he had registered a number of Overseas Marks. Neale was told of this by Chondros sometime after 29 June 2007.
[78] Ellaway was asked at the trial why he had bothered to clarify these “rumours” with the other Founders if, as he maintained at the trial, they had no ownership interest or entitlement to equity participation in other “Ku De Ta”-named operations at all. Ellaway’s answer was that he wanted to keep the other Founders informed in case there was a chance for them to invest in such ventures. This seems odd because he would then not be clarifying the “rumours” at all, but would instead be setting out a business proposal for the other Founders’ consideration and this would in fact have nothing to do with any “rumours”. It is also significant that the opening paragraph of Ellaway’s email of 25 May 2007 contained the following sentence:
And the closing paragraph read as follows:
[79] In our judgment, this email was nothing but an attempt to assuage any concerns which the other Founders might have had at that time about how Ellaway and Chondros were dealing with the Overseas Marks. Ellaway ultimately failed to answer the fundamental question of why he had bothered to provide the other Founders with any information and deal with any concerns they might have had by “responding to recent rumours” if, in fact, he believed that they did not have any interest in the use of the “Ku De Ta” name and that it was Nine Squares instead who had the exclusive interest therein.
[80] Neale called for a partnership meeting in the light of Ellaway’s email of 25 May 2007 and the allusions therein to “preliminary discussions” about commencing a “Ku De Ta”-named operation in Singapore. On 29 June 2007, the other Founders attended the partnership meeting at Ku De Ta Bali’s premises. Neale claimed that he had notified Chondros of this meeting, but the latter did not turn up. Chondros, on the other hand, explained that he had not attended because he had not been invited to the meeting. Whether or not Chondros had in fact been invited to that meeting, there is no dispute that the matters which appear to have been discussed and agreed on by the other Founders at the meeting were later set out in the Email Memorandum which Neale sent to all the Founders, including Chondros, on 6 July 2007, and that Chondros received that email. Amongst other things, the Email Memorandum stated that:
[81] In our judgment, given the context of the partnership meeting on 29 June 2007, it is clear that the other Founders took the position that it was the Partnership as a whole (which, at that time, still consisted of only the Founders), rather than Nine Squares or Chondros alone, that owned the right to decide on the use of the “Ku De Ta” name in any future ventures, and that all the members of the Partnership had an entitlement to benefit from any arrangement that might be concluded to permit the licensing of the use of the “Ku De Ta” name. In our view, this was the point at which the issue of the beneficial ownership of the Overseas Marks (including the Singapore Marks) crystallised among the Founders. Whatever might have transpired up to that point might arguably have been equivocal; indeed, it did not appear that the other Founders even knew about the steps that had been taken to register the Overseas Marks until mid-2007. Once the issue surfaced, however, there is no mistaking the position which the other Founders took. The question then is how Chondros and Ellaway, as the then directors of Nine Squares, responded to this since it would shed light on their true intentions and their understanding of the actual position as to the beneficial ownership of the Overseas Marks.
[82] Significantly, Chondros in fact never replied to object to the contents of the Email Memorandum, or to assert that he alone would have the right to use the “Ku De Ta” name and/or that Nine Squares was both the legal and beneficial owner of the Overseas Marks. The Judge held that silence might not connote a positive representation. This is true; but, with respect, it misses the point. The real question here is: what was the inference to be drawn from Chondros’ silence in these circumstances? The short answer to this is that his silence was inexplicable if his assertion as to Nine Squares’ legal and beneficial ownership of the Overseas Marks is correct or to be believed.
[83] Chondros testified that when he received the Email Memorandum, he went to ask Kadek about it, and that Kadek told him not to worry about it but to continue with his work. The Judge did not find it necessary to make an express finding on Chondros’ silence regarding the Email Memorandum, but she did say that she had “some doubts about the veracity of Chondros’ account of his conversation with Kadek” (at [90] of the 1st Judgment). In our judgment, Chondros’ explanation for his failure to respond to the Email Memorandum was not consistent with his assertion of Nine Squares’ beneficial interest in the Overseas Marks and the Judge was entirely correct to harbour doubts as to his veracity. Chondros initially said that he had “hardly even read” the Email Memorandum. He also said that he did not agree that royalties for the use of the “Ku De Ta” name would have to be paid to the Partnership, but this, of course, would raise the question as to why, then, he did not refute the assertions in the Email Memorandum. Chondros further testified that he did not recall telling Kadek that Nine Squares was the owner of the “Ku De Ta” name or saying anything in detail to Kadek. Chondros then said that Kadek “probably didn’t understand” the words in the Email Memorandum, and when he was probed further, he began to embellish his evidence:
[84] In short, Chondros variously maintained that:
(a) he had hardly read the Email Memorandum;
(b) he had said nothing in detail to Kadek about the Email Memorandum;
(c) Kadek had not understood “the words” in the Email Memorandum;
(d) Kadek had understood “the points” in the Email Memorandum; and
(e) he had discussed the Email Memorandum with Kadek (in which case, we note that he must have read it).
[85] Kadek, on his part, denied having had such a meeting or conversation with Chondros. In our judgment, Chondros’ evidence on this point was inconsistent and self-evidently not credible.
[86] On 21 November 2007, Ellaway sent an email to the other Founders, again copied to Chondros, informing them of a potential expansion opportunity:
The Judge appeared to think that Ellaway’s email of 21 November 2007 was sent in reply to the Email Memorandum, and this was not disputed by Nine Squares on appeal other than to state that Ellaway did not receive the Email Memorandum directly from Neale. What is to be made of Ellaway’s email?
[88] Secondly, regardless of whether or not Ellaway’s email of 21 November 2007 was a direct reply to the Email Memorandum sent by Neale some months earlier, it could not be considered in isolation without regard to that earlier document. There is no dispute that Ellaway was aware of the Email Memorandum. The central assertion of the Email Memorandum was that the “use of the Ku [De] Ta name” had to be approved by “all partners” and had to be governed by a licence agreement that detailed “what royalties are to be paid to Ku [De] Ta Bali”. Ellaway’s email of 21 November 2007 not only did not refute these basic and pointed assertions; on the contrary, on its plain terms, it conveyed the sense that not only would all the members of the Partnership have the opportunity to invest in any new “Ku De Ta”-named venture, but there would also be the commencement of discussions “[a]s previously mentioned … regarding the matter of royalties due & payable”. This could only be a reference to those royalties mentioned in the Email Memorandum, which were payable to the Partnership.
[89] In our judgment, the natural interpretation of Ellaway’s email of 21 November 2007 was that Ellaway accepted the need for Nine Squares to discuss the payment of royalties to the Partnership for the licensing of the use of the “Ku De Ta” name and/or the Overseas Marks for future ventures, and this was simply and wholly inconsistent with any assertion that the rights pertaining to the use of the “Ku De Ta” name and the Overseas Marks vested beneficially in Nine Squares rather than in the Partnership. Unfortunately, this email was not considered in much detail by the Judge in her analysis of the Email Memorandum and Ellaway’s earlier email dated 25 May 2007.
[90] Hence, to return to the observation we made earlier, when the other Founders asserted their position and understanding in the Email Memorandum that the Overseas Marks were being held for the benefit of the Partnership as a whole, Chondros never responded to object to this at all, while Ellaway in fact seemed to acquiesce in this position.
[91] The Judge accepted that Ellaway told third parties that Nine Squares owned Ku De Ta Bali as well as the Overseas Marks and the Indonesian Mark. However, this could not possibly have any probative effect on the question of who, as between Nine Squares and the Partnership, had the beneficial interest in those marks because the latter was not privy to those communications. Indeed, in his discussions with the Partnership, Ellaway was seemingly always careful not to challenge the other Founders’ position that it was the Partnership that owned Ku De Ta Bali and the rights in relation to the use of the “Ku De Ta” name and (among other registered “Ku De Ta” trade marks) the Overseas Marks. The one email from Ellaway that might have seemed to assert Nine Squares’ beneficial ownership of the Overseas Marks (namely, that of 25 May 2007) was firmly refuted by the other Founders via the Email Memorandum, and their position was left unrebutted by Ellaway in his subsequent email of 21 November 2007.
[92] We digress to note that there had been an earlier exchange of emails to a similar effect. In September 2005, Ellaway had sent an email to one Anthony Saatchi (“Saatchi”), copying Kadek, demanding that Saatchi cease the use of “Ku De Ta” images as well as the “Ku De Ta” name and logo in an inflight magazine. Kadek replied to this, copying Chondros and Aki, stating that he had, as a “shareholder”, authorised Saatchi to do so. Ellaway did not then or subsequently dispute Kadek’s right to authorise the use of the “Ku De Ta” name and logo. If Nine Squares was not the beneficial owner of the “Ku De Ta” name and logo as at September 2005, there is nothing to suggest that it somehow acquired that interest after September 2005 and before 6 July 2007, when the Email Memorandum was sent.
[93] In coming to a conclusion on the facts, it is essential to have regard to:
(a) the fact of the Email Memorandum;
(b) Chondros’ lack of response to this;
(c) Chondros’ ill-conceived attempt to take refuge for his lack of response behind an imaginary conversation with Kadek;
(d) Ellaway’s email of 21 November 2007; and
(e) Ellaway’s ill-conceived attempt to place an untenable construction upon that email.
[94] In the Email Memorandum, Neale had also written:
This statement was made in the context of the fact that at that time, Ku De Ta Bali’s website contained the statement “Ku De Ta is a registered TM of Nine Squares Pty Ltd”. The Email Memorandum thus asserted in no uncertain terms that Ku De Ta Bali’s website belonged to the Partnership and not Nine Squares, and that all references to Nine Squares on the website should be removed.
[95] After the Email Memorandum was sent, the references to Nine Squares on Ku De Ta Bali’s website were not removed. Nine Squares contended that the other Founders should have noticed this and should have told Nine Squares to comply with the terms of the Email Memorandum if, indeed, they considered that the Partnership was entitled to control the use and the contents of Ku De Ta Bali’s website. This seemed to weigh on the Judge, who said that the other Founders should have disputed Nine Squares’ assertion of its absolute ownership of the Overseas Marks to the world at large (at [138] of the 1st Judgment). However, in our judgment, this was one instance where silence could not have amounted to acceptance or acquiescence. Once the Email Memorandum had been sent, the other Founders had put forward their position and had asserted the Partnership’s right to control the use of the “Ku De Ta” name. In those circumstances, it was for Nine Squares to respond directly. Ellaway and Chondros both contended that they disagreed with the assertions of the Partnership’s rights that were contained in the Email Memorandum. Yet, Ellaway did not dispute those assertions in the email of 21 November 2007 which he sent subsequent to the Email Memorandum, and Chondros did not respond to that document at all. In any event, it is unclear what the other Founders could have done in the circumstances since Nine Squares, and more specifically, Ellaway, managed Ku De Ta Bali’s website at that time. Finally, the references to Nine Squares on the website were equivocal about the beneficial (as opposed to the legal) ownership of the Overseas Marks. Hence, the Judge, with respect, may have been overstating the position in viewing these references to Nine Squares as an assertion by Nine Squares to the world at large of its absolute ownership of the Overseas Marks.
The Australian proceedings
[96] The most important part of the Appellants’ case on appeal in relation to the express trust point centred on the Judge’s treatment of the evidence given by Chondros in the Australian proceedings on behalf of Nine Squares. Particular reliance was placed on an affidavit dated 14 May 2010 made by Chondros, as the sole director and the holder of half of the shares in Nine Squares as at that date, in which he said that Nine Squares was holding the Overseas Marks on trust for the Partnership. The Judge considered this to be the strongest support for the Appellants’ case that an express trust had been created over those marks.
[97] We pause to recall that the Australian proceedings involved KDTSG and Au suing Nine Squares and seeking, among other things, to uphold the validity of the Licence Agreement for the use of the 1st Singapore Mark that Ellaway had caused Nine Squares to enter into just days after Chondros had confronted Ellaway over his alleged defalcations and misdeeds and told him that he was not to enter into agreements or incur expenditure without Chondros’ consent (see [23]–[25] above).
[98] The specific reference in Chondros’ affidavit to the Partnership’s beneficial ownership of the Overseas Marks was as follows:
[99] In addition, Nine Squares, in the defence dated 11 June 2010 which it filed in the Australian proceedings, asserted at para 6 that the 1st Singapore Mark (the subject matter of the Australian proceedings) was held beneficially for all the Founders.
[100] On a plain reading of Chondros’ affidavit and Nine Squares’ defence in the Australian proceedings, there is no escaping the fact that Chondros had expressly stated that the Overseas Marks were registered by Nine Squares in its name, but were held on trust for the Partnership as a whole; and further, that all the members of the Partnership were entitled to the benefits flowing from the use of those marks. This is consistent with the position taken by the other Founders in the Email Memorandum in respect of licensing the use of the “Ku De Ta” name. At the trial of the present proceedings, Chondros confirmed that the contents of his affidavit in the Australian proceedings were true and accurate, and that he had taken legal advice when it was drafted.
[101] Nine Squares’ position was that this evidence had to be seen in the context of the dispute that was then raging between Chondros and Ellaway. It contended that Chondros had in fact always intended the Overseas Marks, and specifically, the Singapore Marks, to be owned beneficially by Nine Squares. The Overseas Marks had all been registered well after Ku De Ta Bali had been established. Moreover, Chondros had come up with the name and the concept for Ku De Ta Bali. On the other hand, as far as the other members of the Partnership were concerned, Chondros had needed their investment to realise his vision. The Appellants contended that the right to exploit the “Ku De Ta” name, including the registration of Overseas Marks and the benefits that were subsequently derived from doing so, vested in the Partnership collectively. If Nine Squares’ position were correct, then it would be necessary to find that as between Chondros personally and the other members of the Partnership, Chondros alone had that right; and that either Nine Squares was to be treated as the alter ego of Chondros, or Chondros had transferred his alleged right to Nine Squares.
[102] Seen in this light, it becomes evident that Chondros, in his affidavit in the Australian proceedings, had gone against both aspects of what Nine Squares had to prove in the present proceedings since he had maintained there that: (a) he never intended to vest any beneficial interest in the Overseas Marks in Nine Squares; and further, (b) he did not hold the beneficial interest in those marks solely, but with the other members of the Partnership. Taking Nine Squares’ position in the present proceedings to its logical conclusion, we were being asked, in essence, to conclude that Chondros was lying in the Australian proceedings in order to try to defeat the claim that was pursued there; and that he was not lying in the present proceedings in order to try to defeat the claim that the Partnership was pursuing here. To put it another way, we were being asked to ignore the fact that if the Australian proceedings had not been settled and if Chondros’ testimony in those proceedings had been accepted, Nine Squares’ defence in the present proceedings would have been severely compromised, if not altogether doomed.

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Guy Neale and others v Nine Squares Pty Ltd

Grounds of decision

Introduction

The background

The parties

The material facts

Setting up Ku De Ta Bali

Registration of “Ku De Ta” trade marks

Involvement of WH Trading and WH Investments

Breakdown of relations between Chondros and Ellaway

Proceedings in Singapore by the Partnership

The Judge’s decision

Ownership of the “Ku De Ta” name or mark

Establishing an express trust

Establishing an institutional constructive trust

Invalidation of the registration of the Singapore Marks

The Judge’s ruling on Suit 314 and Suit 955

The Partnership’s applications for leave to adduce new evidence on appeal

The issues on appeal

Whether an express trust was established

Basic principles

The Judge’s findings

Our analysis

The 2000 HOA

The events after 2003

The Email Memorandum of July 2007 and the surrounding circumstances

The Australian proceedings