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Grounds publishedDecided 2 Jul 2010
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High Court

Mentormophosis Pty Ltd and others v Phua Raymond and another

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[2010] SGHC 188Case no. Suit No 459 of 2008

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  1. Woo Bih Li J:

  2. Introduction

  3. [1] In this suit, the plaintiffs are claiming that the first defendant made certain false representations to them, thereby inducing them to enter into franchise agreements with a company that was eventually wound up. The plaintiffs claim that the first defendant is personally liable to them for those representations. The first defendant had also at various times served as the managing director of the second defendant, and for this and other reasons the plaintiffs further claim that the second defendant is also liable for the representations made by the first defendant.

  4. Parties and Issues

  5. [2] The first plaintiff, Mentormophosis Pty Ltd (“MPL”) is a company incorporated in Australia. The second plaintiff, DNV Image Pte Ltd (“DNV”) is a company incorporated in Singapore. The third plaintiff, PT Patria Nusantara Perkasa (“PT PNP”) is a company incorporated in Indonesia. The fourth plaintiff, Ms Dian Patriani (“Dian”) is PT PNP’s director.

  6. [3] The first defendant is Mr Raymond Phua (“RP”). RP is the managing director of the second defendant, Da Vinci Holdings Pte Ltd (“DVH”). DVH is the holding company of the Da Vinci Group, a well-known and established business group in Singapore and Southeast Asia.

  7. [4] The plaintiffs had at various times in 2004 and 2005 entered into a number of franchise agreements with Tradewind Group Pte Ltd (“Tradewind”) for the sale of ladies’ footwear. RP was at all material times the sole shareholder and a director of Tradewind. Tradewind was wound up on 1 December 2006.

  8. The claim

  9. [5] The plaintiffs pleaded that they had entered into the franchise agreements as a result of representations made by RP:

  10. [6] The plaintiffs also pleaded that a collateral contract was formed between them and DVH:

  11. [7] The plaintiffs also relied on fraud. Para 16 of the Statement of Claim (Amendment No 2) states:

  12. [8] The plaintiffs also relied on s 2 of the Misrepresentation Act (Cap 390, 1994 Rev Ed).

  13. The defence

  14. [9] The defence primarily denied or did not admit that the alleged representations (“the Representations”) were made, and further denied any reliance thereon by the plaintiffs. RP and DVH also alleged that RP was designated as the managing director of DVH in or about 2003 when preparations were being made for a public listing of DVH and that it was in or around April 2006 that RP was in fact appointed as DVH’s managing director.

  15. [10] The defendants also denied any collateral contract with the plaintiffs and denied that the Representations were made fraudulently.

  16. [11] The defendants also relied on certain similar provisions which were contained in each franchise agreement to exclude liability for any of the Representations that might have been made. For easy reference, I set out below the provisions from the franchise agreement with DNV:

  17. [12] RP also asserted that DNV had elected not to pursue the present action against him because (1) DNV had pursued an action against Tradewind in DC Suit No 1768/2006T for damages for breach of contract and/or (2) DNV had filed a proof of debt against Tradewind on 25 January 2007.

  18. [13] I first briefly review the legal bases of the plaintiffs’ claims against RP, and RP’s defences thereto.

  19. Deceit

  20. [14] The plaintiffs’ principal cause of action lies in the tort of deceit or fraud. The elements of the tort were restated by the Court of Appeal in Panatron Pte Ltd v Lee Cheow Lee [2001] 2 SLR(R) 435 (“Panatron”) at [14], following Bradford Building Society v Borders [1941] 2 All ER 205:

  21. [15] With regard to the requirement that the plaintiff must have acted upon the false statement, the Court of Appeal held at [23] that:

  22. The rationale for such an approach is well explained by Cranworth LJ in Reynell v Sprye (1852) 42 ER 710 at 728–729, 1 De GM & G 660 at 708:

  23. Cranworth LJ was speaking in the context of a fraud perpetrated by one party to the contract on his counterparty, but Panatron, where a managing director of a company was held liable for making fraudulent misrepresentations to others to induce them to invest in the company, makes clear that the position is the same when a party to a contract has entered into that contract as a result of a fraud by a stranger to the contract.

  24. [16] Panatron also makes clear (at [24]) that it does not lie for the fraudster to say that his victim could have discovered the fraud had he been more careful:

  25. Or, as Brennan J pithily put it in Gould v Vaggelas (1985) 157 CLR 215 at 252. “A knave does not escape liability because he is dealing with a fool.”.

  26. [17] With regard to the standard of proof required, the Court of Appeal held in Tang Yoke Kheng (trading as Niklex Supply Co v Lek Benedict [2005] 3 SLR(R) 263 at [14] that, when fraud is alleged in a civil action:

  27. Misrepresentation and piercing the corporate veil

  28. [18] The plaintiffs also relied on s 2(1) of the Misrepresentation Act, which provides as follows:

  29. [19] As can be seen, s 2(1) only applies between parties to a contract. RP is not a party to the franchise agreements between the plaintiffs and Tradewind but the plaintiffs argued that the corporate veil of Tradewind should be pierced so as to render RP liable for the Representations even if the Representations were not made fraudulently. It is not necessary for me to deal with this argument because I conclude, as elaborated below, that RP had made some fraudulent misrepresentations to induce the plaintiffs to enter into the franchise agreements and they did rely on the same. It was not argued that RP could avoid personal liability if I were to find that he had acted fraudulently.

  30. Entire agreement clauses

  31. [20] The defendants had sought to rely on the entire agreement clauses in the franchise agreements between the plaintiffs and Tradewind. The Court of Appeal has observed that “whether or not an entire agreement clause can purport to exclude a claim in misrepresentation remains a matter of some controversy”: Lee Chee Wei v Tan Hor Peow Victor [2007] 3 SLR(R) 537 at [28]. For present purposes it is sufficient for me to confine myself to the following two propositions.

  32. [21] First, since neither RP nor DVH is a party to the franchise agreements between the plaintiffs and Tradewind, they cannot rely on the terms of those agreements. Second, and in any event, a person cannot contractually exclude liability for his own fraud: S Pearson & Son Ltd v Dublin Corporation [1907] AC 351 at 353 per Lord Loreburn LC, at 356 per the Earl of Halsbury, and at 362 per Lord James of Hereford.

  33. Election

  34. [22] As mentioned, RP also pleaded that DNV had elected to sue Tradewind. This was not addressed in any detail in his closing submissions, and I do not think that there is a doctrine which precludes DNV from suing RP and DVH just because they proceeded against Tradewind first or filed a proof of debt against Tradewind.

  35. [23] Given my analysis above, the plaintiffs’ claims against RP would stand or fall depending solely on whether deceit is made out. By contrast, a successful claim against RP is a necessary but insufficient element of the plaintiffs’ claim against DVH.

  36. The factual issues: overview

  37. [24] I turn now to the evidence. As the parties led a considerable amount of evidence, it is helpful to set out the ambit of the factual inquiry before going into details.

  38. The relevant events

  39. [25] The evidence can be grouped as follows:

  40. The witnesses

  41. [26] The plaintiffs had called the following persons as witnesses:

  42. [27] The defendants had proposed to call:

  43. In the end, however, only RP took the stand. DVH associated itself with his evidence. After RP completed his evidence, his counsel informed me that Danny Phoa could not be contacted. At the same time, counsel for DVH made a submission of no case to answer, and withdrew Tony and Veron Lim as its witnesses.

  44. Preliminary points

  45. [28] I would also make a few preliminary points about the factual issues.

  46. [29] As regards the first allegation of fraudulent misrepresentation, ie, that RP had made the Representations knowing that Tradewind would not be able to carry out its obligations under the franchise agreements, I would say at the outset that I do not believe that RP was running his shoe business, including the franchise arrangements made through Tradewind, as a sham for the purpose of making off with the plaintiffs’ and other franchisees’ monies. It is clear from the documentary evidence relating to RP’s dealings with his staff and his franchisees that RP was genuinely trying to run his shoe business as a legitimate business. It is also clear that RP had very great – though ultimately unfulfilled – ambitions for his shoe business. The fact that the plaintiffs have grievances with the way things turned out does not detract from these points. Consequently, it will not be necessary for me to deal with the numerous difficulties alleged by the plaintiffs in the running of their franchises, save to provide context.

  47. [30] I should also observe that all the pleaded representations are oral and were alleged to have been made between 2003 and 2005, ie, more than five years ago. Some were said to be made when no other witnesses were around. That said, the gist of the plaintiffs’ allegations, as evinced by their pleadings, is clear. Their central and consistent claim is that RP at various times and in various ways represented to them that his shoe business was backed by the Da Vinci group to induce them to enter into the franchise agreements with Tradewind, and in reliance on such representations and the undisputed strength of the Da Vinci group they entered into franchise agreements with Tradewind. This central claim, which is essentially the second fraudulent misrepresentation alleged by the plaintiffs (see [7] above), is not affected by what I said in the preceding two paragraphs.

  48. [31] In this regard, it is not in dispute that the Da Vinci group was at no time prepared to support and did not in fact support Tradewind and its business in any substantial way, and that RP knew this at all times. I should say here that Tony did allow RP to use some Da Vinci manpower, warehouse facilities, and office space. However, this was said to be on a personal basis and in any case was very far from the support that the plaintiffs said they were led to expect, in terms of the design, production and quality control of the shoes; the logistical support to the overseas franchisees; the knowledge of the respective markets; and generally the overall running of each franchise.

  49. [32] Separately, it is also not in dispute that Dian, Evelyn, Neo, and Wendy represent PT PNP, DNV and MPL respectively. Thus, if Dian is defrauded, so too is PT PNP and so on. I note that DNV and MPL were incorporated very late in the day, ie, close to the time when the relevant contracts were signed. (The incorporation date of PT PNP is not in evidence.) This means that at least some of the representations which RP was said to have made would have been made before DNV and MPL even came into existence. However, it was not disputed that the representations made to the relevant natural persons would operate also on the relevant companies.

  50. [33] The factual inquiry is therefore confined to whether RP fradulently represented that his shoe business had the backing of the Da Vinci group in order to induce the plaintiffs to enter into the franchise agreements with Tradewind, and whether the plaintiffs relied on such representations in entering into the various franchise agreements with Tradewind.

  51. [34] With regard to assessing the evidence, it should be reiterated that all the representations pleaded by the plaintiffs are said to have been made orally (see [5] above). The factual inquiry therefore turns to a large degree on the credibility of each side’s witnesses. In this regard, it should be mentioned that the witnesses called include persons, such as Peck Lin, who have no direct interest in the present dispute. Generally speaking, the evidence of these disinterested third parties about RP’s dealings with them will, if accepted, have significant value in corroborating or refuting the evidence of the interested parties. While some of the evidence do not relate directly to dealings between the parties, they are still relevant if by themselves or in connection with other facts they make the versions of events advanced by each side highly probable or improbable: s 11(b), Evidence Act (Cap 97, 1997 Rev Ed).

  52. [35] It should also be pointed out that a considerable amount of the evidence led related to events happening after the respective contracts with Tradewind had been made. Such evidence, by itself, cannot directly prove whether RP had made the alleged representations and whether the plaintiffs relied on them. However, depending of course on the particular circumstances, such evidence may be indirect proof of what happened before the respective contracts with Tradewind were made.

  53. Background of RP and his shoe business

  54. [36] I begin with an overview of RP, his relationship with the Da Vinci group, and his shoe business.

  55. Generally

  56. [37] As at August 2009, RP was 39 years old and married with two children. He is the son of Tony and Doris Phua. He graduated with a degree in marketing management from Toledo University, Ohio, in 1991. After graduation, he worked for various companies before he joined his father’s business in 1995 and worked for him in Da Vinci Collection Pte Ltd (“Da Vinci Collection”), which carried on business as importers, exporters, distributors and dealers in market furniture, fitting, lightings and furnishing accessories with one retail store in Bukit Timah. When RP joined Da Vinci Collection in 1995, he had no official title and was assigned to perform various duties, including warehousing and sales. RP married in 1996 and his wife joined him in Da Vinci Collection and assisted him in his duties. On 1 February 1998, RP and his wife were respectively appointed Marketing Director and Sales Director of Da Vinci Collection.

  57. [38] RP said in his affidavit of evidence-in-chief (“AEIC”) and at the beginning of his cross-examination that he and his wife left the Da Vinci group in March 2003 after a dispute with his father, Tony. According to RP, he had been orally appointed the managing director of DVH by that time. RP said that, after March 2003, he did not hold any executive roles in the Da Vinci group until he rejoined the company in April 2006, but qualified that by saying that “if there was any help that [he] thought would be useful for [his father] or -- [he] would still help [his father] out.” He also said that, after leaving the group, he and his wife ceased to draw a salary from the Da Vinci group.

  58. [39] After (allegedly) leaving the Da Vinci group, RP dabbled for a while in the business of importing and exporting furniture, using Tradewind as a vehicle. He then met one Brandon Toh (“Brandon”), who was selling shoes under the brand name “MAC”. RP was taken with Brandon’s concept of using the shoe boxes as part of the store design, instead of putting them in a storeroom. He bought into Brandon’s company, MAC Lifestyle Pte Ltd (which was incorporated on 14 February 2003), and eventually took it over in the middle of 2003 after a dispute with Brandon. Sometime in late 2003 or early 2004, RP received a letter from Wong & Leow, the solicitors of L’Oreal Paris, stating that the use of the “MAC” logo infringed the intellectual property rights of L’Oreal Paris. RP said he was shocked when he received the letter, because Brandon had assured him that the necessary checks were done. It turned out that Brandon had only registered the name with the Registry of Companies. RP said that he then discussed the matter with his father’s business partner in Guangzhou, China, one Raymond Wong (“Raymond”). Raymond suggested that RP use the name “Walking Culture” instead.

  59. [40] RP said that he then decided, as a stop-gap measure, to use the name “Da Vinci Walking Culture” for his company and his brand. He said he chose the name as “the safest name at that point in time.” He said he intended to speak to his father, Tony, later to explain the situation to him and it was only an interim measure until he settled on a new trade name. Consequently, RP changed the name of MAC Lifestyle Pte Ltd to Da Vinci Walking Culture Pte Ltd. He also used the Da Vinci name on his shoes.

  60. [41] According to RP, Tony then discovered that RP had used the Da Vinci name for his shoe business. Tony objected as he did not want the public to confuse RP’s business with the Da Vinci group’s businesses. Consequently, Da Vinci Walking Culture Pte Ltd was renamed Walking Culture International Pte Ltd (“WCIPL”) on 6 August 2004. The shoes were also rebranded.

  61. [42] RP’s shoe business also involved Tradewind. Tradewind was registered on 9 April 2003 as Tradewind Venture Pte Ltd and took its current name, Tradewind Group Pte Ltd, on 15 April 2003. Tradewind originally owned some of the trade marks relating to RP’s shoe business; these were eventually transferred to WCIPL. Tradewind was the entity which entered into the franchise agreements with the plaintiffs, and RP confirmed that WCIPL allowed Tradewind to use its trade marks for Tradewind’s franchising purposes. WCIPL was the entity which operated the Harbourfront and Bugis outlets which were run by RP himself (as opposed to the franchisees). RP disagreed with Mr Tan’s suggestion that Tradewind was set up “as a fall guy, a company that could fail without jeopardising [the] Walking Culture trade marks”.

  62. [43] RP was interested in expanding his business through franchising. To this end, RP engaged FT Consulting to advise him on franchising, and through franchising his shoe business expanded rapidly..

  63. [44] Eventually, however RP’s shoe business failed. Tradewind was wound up on 1 December 2006, less than four years after it was registered. WCIPL closed its outlets at Bugis and Harbourfront, and the company itself was sold to one Steve Chiu, for what RP described as a nominal fee. The timing of the sale to Steve Chiu is unclear. In cross-examination, RP was asked why Tradewind failed. He replied, “... I believe I expanded too quickly. I believe it was because I expanded too quickly without stabilising areas that needed to be stabilised first.” These areas included store management, staff strength, and quality control.

  64. RP’s relationship with the Da Vinci group from 2003 to 2006

  65. [45] This is a convenient point to examine RP’s actual relationship with the group during the lifetime of his shoe business, viz 2003 to 2006. This is a highly relevant fact which would determine whether RP was creating a false or misleading impression in his various acts, such as handing out Da Vinci name cards and signing off as the managing director of DVH. This, in turn, is significant in assessing whether RP had created the false impression that the Da Vinci group and his shoe business were somehow linked. In this regard, I must say that the defendants’ pleadings and RP’s evidence as to his relationship with the Da Vinci group was altogether unsatisfactory, to put it mildly. I propose to refer extensively to the same in the following paragraphs to illustrate how unhelpful they were.

  66. [46] As mentioned above, RP and DVH alleged in their pleadings that RP was (only) designated as managing director of DVH in 2003 when preparations were being made for a public listing of DVH. It was (only) in or around 2006 that RP was in fact appointed as DVH’s managing director.

  67. [47] RP elaborated on this position in his AEIC, which was, significantly, made on behalf of both himself and DVH. In para 1, RP said he was previously working as a manager for DVH’s group of companies. He left their employment on 31 March 2003 and rejoined as their managing director on 1 April 2006. In para 8, he said he was appointed a director to the boards of DVH and its subsidiaries on 1 November 2002, but he did not and was not required to carry out any duty as a director. In paras 22, 24–27 and 29, he gave more background. He said he worked for his father in Da Vinci Collection after graduation in 1991. He married in 1996 and his wife joined him in Da Vinci Collection to assist him. On 1 February 1998, he and his wife were appointed as marketing director and sales director respectively of Da Vinci Collection. He and his wife left the company in March after a major argument with his father. In para 113(e), he said that the only time between 2003 and 2006 he had identified himself as the managing director of DVH was in an email he sent to Dian on 19 June 2004. He alleged he did so as he was designated as such when DVH was making preparations for a public listing.

  68. [48] In his AEIC, RP also exhibited two Form IR8A returns to the Inland Revenue Authority of Singapore. The first was filed in 2003 and stated that he ceased his appointment as manager on 31 March 2003. The second was filed in 2006 and stated that his appointment as manager director commenced on 1 April 2006.

  69. [49] However, in the agreed bundles, there were numerous instances of RP signing off his email and letters with references to the Da Vinci group. In some cases, it was clear that RP was signing off as the managing director of DVH or some company in the Da Vinci group. An example is his email to Dian of 19 June 2004 from his email address “rayphua@davinciasia.com”, where he signed off as:

  70. In some cases, it was clear that RP signed off as managing director of both WCIPL and DVH (or some company in the Da Vinci group). An example was his email to Wendy and Peck Lin of 26 January 2005 from his email rayphua@walkingculture.com, where he signed off as (I reproduce the line separators as well as the actual words):

  71. [50] According to other witnesses, including third parties such as Peck Lin and Tan, there were also various instances when RP linked himself to the Da Vinci group by handing out Da Vinci name cards. RP confirmed giving out Da Vinci name cards to Peck Lin, to Indonesian landlords he met with Dian and to Tan whom he met with Evelyn and Neo.

  72. [51] At the beginning of his cross-examination, RP said he left the Da Vinci group between March 2003 and April 2006 and did not hold any executive role, subject to the caveat that he helped his father out if he thought such help would be useful. This was confirmed at one point.

  73. [52] When questioned as to why he signed off as “managing director of Da Vinci Holdings” in an email date 19 June 2004 to Dian, RP confirmed that he was in fact the managing director of DVH at that time.

  74. [53] There were also some articles at the material time referring to RP as the managing or marketing director of DVH. When I asked him for clarification about an article dated 28 October 2004 in the TODAY newspaper, which said that RP was the managing director of DVH, RP equivocated.

  75. A while later RP maintained this position, ie, that he was no longer a director of DVH.

  76. [54] When questioned on why he handed out DVH name cards stating he was its marketing director to Indonesian landlords he met with Dian, RP confirmed that he had ceased to be the marketing director of DVH. He answered somewhat differently when I again asked for clarification the next day:

  77. [55] RP also confirmed that he was the managing director of DVH when he accompanied Evelyn and Neo to meet a prospective landlord for their franchise. This was by way of explaining why he gave a DVH card stating him to be a marketing director. (The other details of that meeting are disputed: see [124-128] below.)

  78. [56] At various points, RP said that various persons knew he left the group or were told of the same by him. He said he explained to Peck Lin why he left the group. He said that, when he spoke to reporters, he would have talked about the fact that he had left the business. He said that he told one Louis Chambi (“Chambi”), a potential franchisee, that he left Da Vinci. He said that Dian knew about why he left the business of Da Vinci. He said he told Dian he left Da Vinci. He said Wendy knew he had left Da Vinci. He said all four of the plaintiffs knew that he had left the Da Vinci group, and that he had explained this to them “in larger detail”.

  79. [57] At the end of re-examination, RP was still unable to decide on his evidence. He said that, in 2004, he was appointed the managing director for Da Vinci Jewellery. He said that, between 2003 and 2006, he was not told by his father that he was no longer the managing director for DVH and Da Vinci collection. He said that, between 2004 and 2006, he was not told by his father that he was no longer the managing director of Da Vinci Jewellery. He said that, to the best of his knowledge, his father did not tell anyone that he was removed as managing director of these companies during this period. He said that he did nothing important for the Da Vinci group between 2003 to 2006; he only performed some errands. He said that he basically stopped going for work but retained his appointments. He said, of the impressions he gave about his relationship with the Da Vinci group, “I did not run away from the business. I took time to concentrate on my new business and it was not because I wanted to not be associated with it. It’s definitely not the case. Like I said, I’ve been with Da Vinci since I was 25 years old.” In response to my request for clarification just before I released him, he said:

  80. [58] Effectively, RP had taken three positions as regards his relationship with the Da Vinci group between 2003 to 2006. First, he said he was only the marketing director of Da Vinci Collection up to March 2003. He was not the managing director of DVH but only the managing director designate. He had told the plaintiffs that he had left the Da Vinci group in 2003. Second, RP said he considered himself a managing director of DVH at the material time. There were also the references to this position in newspaper articles, and references to the Da Vinci group in his email and correspondence signatures. Finally, RP took a position in between, ie, that he retained his appointments but only did minimal work.

  81. [59] RP should have been well aware of his position in the Da Vinci group. Certainly, his vacillating evidence, on a material point on which he should well be able to respond simply and directly, seriously dented his credibility as a witness. It is noteworthy that counsel for RP did not refer to RP’s evidence on this point in any detail in submission, and instead preferred to focus on attacking the plaintiffs’ case.

  82. [60] In fact, it seems that there is no benign way to view RP’s evidence. If he really continued to hold executive roles in the Da Vinci group between 2003 and 2006, then his allegations that he had informed various persons that he had left the group would be entirely incongruous. If he had made a clean break, then his various acts linking himself to the group would create a false impression. If he continued to hold appointments but only (as he put it) ran some errands, other problems arise. It would still be incongruous for him to say that he left the group, especially given his own evidence in re-examination that he did not see it that way (see [57] above). His various acts linking himself to the Da Vinci group would still be misleading, since they would convey the impression that he was still with the group but not the fact that he was far from being involved in any significant way. In this regard, it is unbelievable that RP ever conveyed to anyone his (allegedly) nuanced position in the group, which he was able to articulate only after six days of cross-examination. At the very least, RP’s evidence strongly suggests that he was not as scrupulous in distancing himself and his shoe business from the Da Vinci group as he claimed to be.

  83. [61] Further, the way RP sought to justify his various acts which suggested an ongoing relationship between him and Da Vinci from 2003 to 2006 is highly significant. As said, these acts included the handing out of Da Vinci name cards and email signatures as the managing director of DVH. If, hypothetically, RP had admitted that those acts were honest or careless mistakes (either by him or third parties, eg, reporters), the significance of those acts might well have been arguable (though even then the sheer number of incidents would require quite some explanation). The fact that RP chose to justify those acts by an explanation which he could not defend consistently, ie, that he was in fact the managing director of DVH – strongly suggests that he knew that there was something wrong with those acts if indeed he was not the managing director of DVH.

  84. [62] With that, I turn now to view RP’s dealings with various persons in this suit, as seen from their perspective.

  85. RP’s dealings with Wong Peck Lin and FT Consulting (May 2004 to September 2005)

  86. [63] Peck Lin graduated with a Bachelor of Laws (Honours) from the National University of Singapore in 1994 and is an advocate and solicitor of the Supreme Court of Singapore. She was employed by FT Consulting, RP’s franchising consultant, between 1999 and 2008, first as a junior consultant and eventually became a director. As mentioned, she was subpoenaed to give evidence on behalf of the plaintiffs.

  87. [64] In her statement, Peck Lin said that she and a colleague, John Ong, first met RP on or about 25 May 2004 in the Da Vinci building at 3 Tai Seng Drive. This was more than a year after RP said he left the group in March 2003 (according to his AEIC). Peck Lin said that she and John Ong knew of DVH as being a retailer of luxury furniture, and were given to understand that Da Vinci wanted to engage consultants to advise on franchising. At that meeting, RP talked about his background and experience at Da Vinci, the Da Vinci businesses and its expansion plans, and about the Walking Culture concept and business. Peck Lin and John Ong, for their part, gave a presentation on FT Consulting’s franchise development.

  88. [65] For his part, RP said that he had told FT Consulting about his past experience with the Da Vinci group and that he had left the group. However, in cross-examination, he vacillated several times as to whether he had said the latter at the first meeting. His version was also not put to Peck Lin. I should also point out that any allegation by RP that he had left the group would be at odds with his final position that he retained his appointments (see [57] above). In any event, RP accepted that he had handed FT Consulting a name card with the Da Vinci name on it.

  89. [66] Peck Lin said that after the meeting, Raymond gave her and John Ong a tour of the Da Vinci building. During the tour, Peck Lin and John Ong saw a roomful of designers. RP said that Da Vinci’s in-house designers would be designing new shoe designs for Walking Culture. This left a distinct impression on Peck Lin’s mind, as she remembered thinking “how versatile these designers are, that they can design jewellery, watches and even shoes! All of which are quite different products”.

  90. [67] Counsel for RP suggested to Peck Lin that RP did not take her on a tour of the Da Vinci building, and that Da Vinci’s designers were all for furniture and were in any case based in Indonesia. Peck Lin disagreed.

  91. [68] Peck Lin said that, based on the information gathered at the 25 May 2004 meeting, she and John Ong prepared a franchise consultancy proposal, which was forwarded to RP with a cover letter dated 26 May 2004. The cover letter was addressed to “Mr Raymond Phua, Da Vinci Holdings Pte Ltd” and began with the statement:

  92. When he received FT Consulting’s letter, RP did not correct them or query them as to why the letter was addressed to him as being from DVH. RP accepted the terms of the FT Consulting proposal by signing the Assignment Instructions dated 1 June 2004 on behalf of Tradewind.

  93. [69] Peck Lin did not produce for the trial the proposal said to have been sent on 26 May 2004. However, a version dated 1 June 2004 was produced. This was sent as an enclosure to Tradewind’s 3 June 2004 application to Spring Singapore for government grant funding for the franchise project. The 1 June 2004 proposal was entitled “Walking Culture (by Da Vinci)”. Its preamble read in full as follows:

  94. I pause here to observe that a plain reading of the preamble gives the impression that DVH itself was branching out into the shoe retail business. At the end of the proposal, RP declared that:

  95. Spring Singapore approved the Spring Singapore application on 17 June 2004 and funded 50% of the project cost. The claim for the grant was successfully made around September 2004 with no amendments to the proposal which was submitted.

  96. [70] According to RP, he did realise that the preamble to the proposal was incorrect in that DVH was not connected with his shoe business. He told Peck Lin about the mistake but she said that that was the way to pitch the proposal to obtain the grant. He went along with her advice. Peck Lin however denied that he had told her about the alleged mistake. To support his allegation that he was not trying to connect Walking Culture with the Da Vinci group, RP said that he had given an interview for a Spring Singapore magazine called Productivity Digest. The issue of 20 November 2004 carried an article on the interview and made no suggestion that Walking Culture was connected with the Da Vinci group. There was also an article in the April 2005 edition of a publication called Men’s Folio. This article mentioned that Walking Culture was a completely separate business entity from the Da Vinci group but also referred to his position as managing director of DVH.

  97. [71] Peck Lin also exhibited email in May 2004 between RP and Chambi, a potential franchisee in South Africa. The email showed that Chambi thought that he was dealing with the Da Vinci group. For his part, RP said that in May 2004, his franchise concept was not fully formed yet and Chambi might have gotten the impression of a connection with the Da Vinci group because he saw the Bugis outlet with the name Da Vinci Walking Culture at the time, ie, around May 2004. He said that he did tell Chambi that he had left the Da Vinci group.

  98. [72] Peck Lin also said that, sometime in September 2004, she helped RP to prepare a Walking Culture PowerPoint presentation for the Global Franchise Exhibition (“GFE”) held in Singapore. The presentation she prepared focused only on Walking Culture. However, sometime later after the exhibition (she did not know when), RP added more slides to and generally amended the franchise marketing presentation. After RP’s amendments, the presentation began with a slide entitled “The Group”, followed by some slides entitled “The Companies” and showing pictures of Da Vinci branches worldwide. The first of these slides carried the following description:

  99. The slides relating to Walking Culture followed the slides relating to the Da Vinci group. All the slides, including those referring to the Da Vinci group, bore the Walking Culture logo, name, and a motto “it’s all about u” at the bottom.

  100. [73] According to RP, his addition to Peck Lin’s slides was to show his past experience with the Da Vinci group. Also, he would orally tell his audience that Walking Culture was separate from the Da Vinci group before he used the slides. If the slides were to be used by others, he would first tell them that the reference to the Da Vinci group therein was only to explain his past experience with the group. He denied associating Walking Culture with the Da Vinci group.

  101. [74] Peck Lin also testified that, in the course of her dealings with RP on various occasions, she heard him say to potential franchisees that Walking Culture could use or leverage on Da Vinci’s design capabilities, business network and infrastructure (logistics, delivery, warehousing, quality control, price tagging, packing, all of which were very labour-intensive). The fact that Walking Culture had access to this big business network/infrastructure was a key selling point of the Walking Culture franchise. This, coupled with the fact that RP himself was the son of Tony Phua, gave the impression that there was a close connection between Walking Culture and Da Vinci. RP also frequently mentioned his personal vast experience in retail and marketing during his years working in Da Vinci. Peck Lin also gave some evidence about RP’s dealings with Neo and Evelyn, which I will refer to in further detail later on.

  102. [75] Peck Lin said in her statement that she felt at one point that RP was growing Walking Culture too fast by signing too many franchisees at one time. She referred to an email from herself to RP dated 11 October 2004, in response to a request by RP to follow up on one Louis Chambi, a potential franchisee from South Africa. In that email, Peck Lin wrote:

  103. To this, RP simply replied, on 13 October 2004:

  104. Peck Lin was not cross-examined on such email.

  105. [76] I pause here to evaluate Peck Lin’s evidence against RP’s. Judging from RP’s curt reply to Peck Lin’s counsel of caution in her email of 11 October 2004, RP was not a person who would let Peck Lin dictate or even influence his commercial strategy, even after knowing Peck Lin for some five months at that point. This seems corroborated by RP’s reflection during re-examination that, on hindsight, he expanded too fast (see [44] above). I therefore find it unbelievable that RP would have permitted Peck Lin to link DVH and Walking Culture so closely in the Spring Singapore application, which was made early on in their relationship, if he firmly did not want to create such a false impression. At the very least, RP must have acquiesced in creating such a false impression.

  106. [77] I would go further and say that I disbelieve RP’s explanation that Peck Lin advised him to create such a false impression. On 1 June 2004, the date of the draft proposal quoted at [69] above, Peck Lin had known RP for barely a week. Without any concrete evidence, I find it incredulous that Peck Lin would be advising RP to give what was clearly a false impression in a formal application to a government department so soon after meeting him. It bears mention here that the false impression given in the Spring Singapore application could not, by any stretch, be attributed to careless language or suchlike. It seems, therefore, that RP must have told Peck Lin that Walking Culture was closely linked to DVH, and in fact DVH was venturing into the shoe business through Walking Culture. Peck Lin, in turn, quite naturally seized upon this as a selling point in preparing the application to Spring Singapore.

  107. [78] I should also observe here that RP’s dealings with Peck Lin leading up to the Spring Singapore application occurred about the same time when Dian signed the franchise agreement on behalf of PT PNP.

  108. [79] As for Peck Lin’s PowerPoint slides which were supplemented by RP, I do not accept RP’s evidence that the amendments were made to highlight RP’s experience with the Da Vinci group. The slides referring to the Da Vinci group said nothing about RP. Further, there seems to be no innocent explanation why RP would choose to insert references to the Da Vinci group in a presentation about Walking Culture, if indeed they were unconnected. It is true that the timing of RP’s amendment of Peck Lin’s slides is not clear and it cannot therefore be said to be used on and relied upon by specific persons on specific occasions. Nevertheless, RP’s additions to the presentation, whenever it took place, supported the plaintiffs contention that he was using the Da Vinci group to sell Walking Culture.

  109. [80] Seen in light of the above analysis, some weight must also be given to Peck Lin’s evidence that RP had represented to potential franchisees that Walking Culture could leverage on Da Vinci’s capabilities.

  110. RP’s dealings with Dian Patriani and PT PNP (mid-2003 onwards)

  111. [81] Dian is a director and owner of PT PNP, a cottage-type industry that produces handbags by hand from her house in Jogjakarta.

  112. First meeting

  113. [82] Dian first met RP in the middle of 2003, when RP visited Dian’s factory. According to Dian, RP introduced himself as the managing director of Da Vinci and handed her two Da Vinci name cards. RP told her that he was the eldest son of the owner of Da Vinci, and that Da Vinci had a new shoe business. He told her that Da Vinci had outlets all over the world and was very big in Indonesia, and that eight out of ten people in Indonesia would know of Da Vinci. She said he showed her a presentation on his laptop; the presentation was on Da Vinci and showed pictures of bags and shoes. She saw the Da Vinci logo. She said RP said that he was looking for someone to produce shoes for Da Vinci Walking Culture. She told him she did not make bags or shoes resembling those she had been shown but he encouraged her to learn.

  114. [83] RP said that when he first met Dian at Jogjakarta, it was to buy handbags from her. He said he would not have introduced himself as being from the Da Vinci group as he was hoping to get a discount from her; to say he was from a big group would have jeopardised his chance of getting a lower price from her. He said he gave Dian a Tradewind name card. He did not hand Dian any name card with the Da Vinci name or logo thereon. Although he had left the Da Vinci group, he had retained some of its name cards to hand only to landlords to whom he was introduced if he thought his father might be interested in a property. He said that he did not bring a laptop to Jogjakarta when he first met Dian.

  115. [84] I should note here that RP’s explanation that he would not have raised the Da Vinci name because he wanted a discount does not cohere very well with some of his later evidence. I shall refer to this at the appropriate point.

  116. Visit to Singapore

  117. [85] A few months after RP visited her factory, Dian came to Singapore. She took the opportunity to contact RP. According to Dian, RP drove her past the Da Vinci showroom in Tanglin. She said he brought her to his outlet at Bugis which was a Da Vinci Walking Culture outlet. He gave her a Da Vinci Jewellery name card which described him as managing director. He told her that Da Vinci was a large successful retail company in Indonesia. She said he broached the subject again of her supplying him with shoes and offered to introduce her to suppliers of materials in China. He said that he had factories in various countries and one in China. He also brought her past the Da Vinci building at No 3, Tai Seng Drive when she was in Singapore.

  118. [86] RP said that when Dian first paid a visit to his retail outlet at Bugis, that shop had a MAC signage and not Da Vinci Walking Culture. He denied bringing her pass the Da Vinci showroom at Tanglin or the Da Vinci Building at Tai Seng Drive. He said that it was only in her subsequent visits that his Bugis shop would have the Da Vinci Walking Culture signage; by then, she would not have thought that his shoe business was linked to the Da Vinci group as he had already told her through various conversations about his quarrel with his father and his background and his having left the Da Vinci group to start his own shoe business. However, while he frequently alluded to such conversations, he did not actually go into detail on them. RP further said that Dian knew that he started off with the MAC brand and why he changed it to Da Vinci Walking culture and then to Walking Culture. He said he told her after her first visit to the Bugis outlet.

  119. Visit to China

  120. [87] In 2004, Dian went to China with RP. He took her to a Da Vinci building in Guangzhou. She was introduced to one Amy whose name card had the Da Vinci name and logo. She also obtained name cards of Chinese suppliers. RP also made a presentation to her about Da Vinci and gave her a brochure on jewellery which was yet to be launched. After the visit, Dian informed RP that it would be too expensive for her to obtain materials from China. RP then suggested that she could be his local partner of shoes in Indonesia.

  121. [88] On the way back from China to Singapore, Dian said that she asked RP why he was not opening a Da Vinci Walking Culture store in Indonesia himself. She said that RP replied that the shoes should not be marketed together with other Da Vinci products. She said that he represented the importance of linking the Da Vinci brand name with the business he wanted her to do. She said she told him that she had not lived in Jakarta before and had no experience in retail business but he said that there was no need for such experience and he knew the Indonesian market well.

  122. [89] RP said that he brought Dian to China to see how products were made and the quality as he was considering the possibility of a franchise or whether she could make the products for his Da Vinci Walking Culture brand. He said that they met at the Da Vinci Building in Guangzhou as that building was near the hotel where she stayed and they had to pick Amy up. He agreed that she was introduced to Amy but said Amy was only helping to co-ordinate his trips and some purchase requirements. He disputed that he gave Dian a Da Vinci Jewellery brochure. He could not recall giving her a Da Vinci Jewellery name card.

  123. [90] Dian said that, after the trip to China, RP contacted her and said that he wanted to have a franchise venture with her. The next time when Dian was in Singapore, RP passed her a franchise analysis and introduced her to one June Lim, a property agent from DTZ. June could help Dian find a good location in Jakarta for a proposed shoe outlet. She said that, when she expressed her lack of retail experience again, RP told her not to worry and reminded her of Da Vinci’s presence in Indonesia.

  124. Letter of Intent

  125. [91] Dian said that, after she returned to Indonesia, RP called her to say that there were many interested parties in the Indonesian franchise. She said that he encouraged her to take up the franchise and said that as she was his friend, he would keep the franchise for her.

  126. [92] RP then sent a letter of intent to Dian around 29 May 2004. After she received it, she placed a deposit of $5,000 with him on 1 June 2004 to proceed with the franchise arrangement. She noticed the name of “Tradewind” in the letter of intent and asked RP about it as she had only heard of Walking Culture and Da Vinci up till then. RP told her not to worry and said that Tradewind was just a company for the franchise.

  127. Jakarta visit; signing of franchise agreement; visiting landlords

  128. [93] Around 10 June 2004, RP came to Jakarta. Dian paid a second deposit of $10,000 for the franchise on 11 June 2004. RP took her on a tour of the Da Vinci building in Jakarta. RP also spoke to his property agent in DTZ Indonesia, one Vivi Ganto and asked Ganto to help look for a suitable location for the retail outlet. Whenever RP and Dian met landlords, RP would introduce himself as the managing director of DVH.

  129. [95] On 13 June 2004, RP and Dian went to PIM2 which was still under construction. Dian said RP told her that PIM2 was going to be a high class mall and that without the backing of Da Vinci, he would have been unsuccessful in procuring a shop unit there. She said that at the meeting with a representative of the landlord of PIM2, RP gave a name card which had the name Da Vinci. The meeting dealt with matters concerning Da Vinci Walking Culture and Da Vinci Jewellery.

  130. [96] The PIM2 mall would only be opened in mid 2005. Pursuant to the franchise agreement, the first retail outlet was to be opened by November 2004. Dian said she suggested that this deadline be pushed back but RP did not agree. RP suggested that she open another shop. She said she was reluctant to open two shops but RP assured her of Da Vinci’s success in Indonesia and that the PIM2 outlet would be subsidised by the first outlet. She agreed. With DTZ’s help, they found a unit at Artha Garding Mall (“AGM”), a middle class mall. She entered into a rental agreement with AGM.

  131. [97] RP said that, when meeting the representative of the PIM2 landlord, he gave a Da Vinci business card to the representative. It was for Da Vinci Jewellery. There was already an agreement for a Da Vinci Jewellery store at PIM2. He said he had not yet met the representative he met with Dian and that was why he handed his name card to him. In his mind, he was still helping his father out and he saw nothing wrong with handing over a Da Vinci card. It stated his position as managing director of Da Vinci Jewellery. He denied he had made a presentation for Da Vinci Jewellery as the landlords of PIM1 and PIM2 already knew about Da Vinci Jewellery. He agreed that the opening of PIM2 would be too late for the franchise business. Eventually, a housing agent from DTZ recommended a unit at AGM. RP said that he had preferred another location at a more popular mall, ie, Taman Anggrek but Dian could not be found when that unit was available. As for the AGM unit, he said he had reservations about it but he had no choice but to approve it as Dian was already renovating the unit.

  132. [98] RP said that Dian agreed to be a franchisee of the shoe business not because of the Da Vinci name but because he had a nice concept which used the shoe boxes as part of the store design.

  133. Operation of the outlets; signing of master franchise agreement

  134. [99] Dian and three of her staff went to Singapore for a training session held at the Bugis outlet. She said they would however meet first at an office or warehouse at the Da Vinci building at Tai Seng. She said that, at the training session, RP would again speak about the success of Da Vinci. Dian also paid $100,000 for the purchase of shoe stock. RP said he did not start the training session by meeting them at Da Vinci building.

  135. [100] After some initial reluctance on the part of RP, Dian was allowed to inspect shoes stored at Da Vinci warehouse.

  136. [101] The outlet at AGM was opened on 23 November 2004. Dian said that she encountered problems right from the first shipment of shoes. Some of the problems were as follows:

  137. PT PNP was also supposed to use a Point of Sale (“POS”) system but it encountered problems with the system.

  138. [102] RP accepted that in the first shipment of goods to PT PNP, there were shoes containing the label Da Vinci Walking Culture and Walking Culture. He remembered Dian asked him about the change. He said that she already knew about the reason from earlier conversations. He told her it would look better. Walking Culture was the brand to be used for the franchise. He had explained the change from MAC to Da Vinci Walking Culture and then to Walking Culture. He did not confine his response to saying he wanted to target a younger crowd. She knew he was no longer with the Da Vinci group.

  139. [103] Dian said RP assured her that the next batch of shoes would be of better quality. He told her that the Singapore outlets were doing well and a Melbourne outlet had also opened. He encouraged her to get a master franchise for Indonesia. She said he told her that, with the master franchise, she would engage sub-franchisees and earn sub-franchise fees. RP also made a PowerPoint presentation. The presentation included references to the Da Vinci group. The name of Da Vinci could be found together with the name and logo of Walking Culture on some slides. The presentation was initially made by RP to Dian on his laptop before a fair in Surabaya. Then on 25 March 2005, at that fair, the presentation was flashed onto a big screen from time to time by Dian and/or her staff for public consumption. After the Surabaya fair, the presentation was repeated in Singapore by RP at his retail outlet at Harbourfront.

  140. [104] I pause here to refer to the presentation. The presentation was substantially similar to the one RP amended from Peck Lin’s original (see [72] above). It began with a slide entitled “The Group”. The second slide stated:

  141. The third slide stated:

  142. The third through sixth slides showed pictures of Da Vinci branches in Singapore, Indonesia, China, Hong Kong, Taiwan, Malaysia and Brunei. Thereafter, the slides focussed on Walking Culture. All the slides were marked at the bottom right with Walking Culture’s logo, name and motto.

  143. [105] The commercial terms of the master franchise agreement were negotiated by one Budi Untung, a lawyer and notary public, on Dian’s behalf. Eventually she signed the same with Tradewind on or about 25 March 2005 but this was backdated to 12 June 2004 (the same date as the franchise agreement with PT PNP).

  144. [106] In the meantime, PT PNP entered into a rental agreement for the PIM2 outlet in June or July 2004. Thereafter, another rental agreement was entered into for an outlet in Jogjakarta and a factory outlet in Solo, Indonesia.

  145. [107] Unfortunately, Dian and PT PNP continued to encounter difficulties with the shoes supplied and the POS system.

  146. [108] Because of these problems, Dian wanted to close one of the shops in Jakarta. Subsequently, she learned that Steve Chui had taken over WCIPL. However, he could not help much. Dian eventually decided to close both outlets in Jakarta and had a clearance sale of shoes at the Jogjakarta outlet.

  147. [109] Dian said she found out about RP’s fraud in September 2008, three months after this action was commenced.

  148. Correspondence

  149. [110] Dian referred to an email from RP using his Da Vinci email address dated 19 June 2004 to her. In this email, he had signed off as managing director of DVH. Below that were the names of other Da Vinci companies and Walking Culture. Thereafter, there was other subsequent email from RP sometimes using his email address at Walking Culture. He would sign off as managing director or chairman and chief executive officer of WCIPL. However, below that, the name of DVH was also set out. Formal correspondence would be sent to RP at WCIPL.

  150. [111] RP accepted that in his email of 19 June 2004, he had signed off as the managing director of DVH. He said this was before the Walking Culture business was completely set up. That was the way he used to sign off in the past. He added the name Walking Culture to a row of companies with the Da Vinci name only to show the companies that he was associated with and not to suggest that Walking Culture was part of the Da Vinci group. Email on issues indicated that it came from him as Chairman and CEO of WCIPL although DVH’s name was also stated therein. RP said that was his template but Dian would know the background he had explained to her. He said that just because the names of two companies appeared at the end of the same email did not mean that they were related.

  151. [112] He also said that by putting the names of three companies (Tradewind Group Pte Ltd, Tradewind Lifestyle Pte Ltd, WCIPL) on a letterhead, it did not necessarily mean they were part of the same group. He admitted that he told Dian he was the managing director of DVH in one of their conversations.

  152. RP’s dealings with Evelyn and Neo of DNV (September 2004 onwards)

  153. [113] DNV is a company incorporated in Singapore to operate the Walking Culture franchise for two outlets in Singapore. Its directors and shareholders are Neo and Chung Sze Yiing (“Shavon”) but Neo’s wife, Evelyn was also actively involved in the business. Shavon is Evelyn’s niece.

  154. [114] Evelyn was the principal witness for DNV. Evelyn said that she was a financial services consultant and/or life insurance agent for the past 11 years (by the time of the trial) and in sales for the last 20 years or so. She had been taught law subjects like contract and tort as part of her training. A search on Evelyn showed that she had also been holding the position of managing director or director or manager in various companies and was a shareholder in various companies. This was contrary to her earlier evidence (on 16 September 2009) that she was not a director or shareholder of any company.

  155. [115] Neo has his own businesses (through various companies) in electronics for over 20 years (by the time of the trial).

  156. GFE

  157. [116] Evelyn said that on or about 17 September 2004, she visited the GFE at Suntec Convention Centre with Shavon. They came across the Walking Culture booth and obtained a publicity folder which contained among other things a brochure about Walking Culture franchising opportunities. The brochure itself did not make any reference to the Da Vinci group. (It did, however, refer to the Walking Culture website, the 2007 version of which made extensive references to the Da Vinci group: see [187] below.)

  158. 30 September 2004 meeting

  159. [117] Evelyn was interested to find out more and eventually a meeting was arranged for 30 September 2004. On that day, Neo and Evelyn went to the office of FT Consulting at The Globe, 100 Cecil Street, #12-01. Peck Lin, her colleague Su-Anne and RP were there. According to Evelyn, RP handed her his name card which stated that he was the managing director of Walking Culture.

  160. [118] Evelyn said RP made a presentation which lasted over two hours. RP said a number of things during the presentation. He said he was the managing director of DVH and spoke of his past experience there. He spoke about the global success of the Da Vinci group. He said Walking Culture was part of Da Vinci’s shoe business. He said he operated the Walking Culture business out of his office and warehouse at the Da Vinci building at Tai Seng. He said Walking Culture was distributed in Milan, Madrid, Paris, London, New York, Singapore, Kuala Lumpur, Jarkarta, Melbourne, Taiwan, Hong Kong, China, the United States, Canada, etc. He said Da Vinci had a lot of designers from all over the world to design shoes for Walking Culture. The shoes would be manufactured in Walking Culture factories in China. He said he was assisted by a dedicated team and many staff. His years of retail experience with Da Vinci would help him bring Walking Culture to a very high level in the fastest time possible. He said he had plans to list Walking Culture in three years’ time. He preferred franchisees like Evelyn and Neo who had no retail experience. He would take care of all warehousing, logistics and price tagging of the stock as Da Vinci had all the logistical support; the franchisees need only be concerned with in-store operations. He said that, based on his experience and the support he had from Da Vinci, he could train everybody who would take the franchise, even someone with zero experience. He agreed with Evelyn and Neo it would be better to open two outlets rather than one. At the end of the presentation, Evelyn and Neo decided to go ahead with the franchise and RP told them Peck Lin would prepare the franchise agreements and call them for another meeting.

  161. [119] Evelyn had made notes of the 30 September 2004 meeting. The notes did not contain the information which Evelyn claimed RP had given about Da Vinci except for a reference to Da Vinci having won three awards. She said that this was because her notes were focussed on going forward as a franchisee after they had established that Da Vinci was running the business.

  162. [120] According to Peck Lin’s statement, RP said at the meeting, which was attended by Evelyn and other potential franchisees, that all the warehousing, logistics and price tagging of the stock would be done by the franchisor at the Da Vinci building/warehouse. She heard him tell them that he could buy back slow-moving or dead stock at a certain price. She also heard him tell them that Tradewind as the franchisor would be managing some of the biggest headaches in the shoe retail business for them as part of the franchise deal, leaving them free to concentrate on in-store selling and customer service. However, in cross-examination, Peck Lin could not recall whether RP had specifically said Tradewind was the franchisor.

  163. [121] RP’s version was rather different. He denied that he told Evelyn and Neo on 30 September 2004 that Da Vinci had designers all over the world nor did he say it had factories in China. He denied saying that as persons without retail experience they were perfect. He denied saying he would assist on the entire set up and operations and would guide them through the whole operation. He denied saying Da Vinci would provide logistical support.

  164. [122] RP said that he made a presentation to persons interested in the franchise at the office of FT Consultancy after the GFE. This presentation was attended by about ten interested parties (including, perhaps, Evelyn and Neo). This was before he met them separately on or about 30 September 2004. He talked about Da Vinci, his background and his retail experience. He did not in any way, suggest that the Walking Culture business was associated with the Da Vinci group. He did not say that Walking Culture was distributed all over the world nor did he say that it was distributed in Milan, Madrid, Paris, London and New York although he accepted that these cities were stated on the reverse of his Walking Culture name card. He accepted that Walking Culture shoes were not sold in these cities. However, he said that these cities were named not to give a false impression but as a form of marketing. He said in cross-examination that a PowerPoint presentation was made to the interested franchisees but it was not clear which version was shown.

  165. [123] Neo, in his AEIC, simply confirmed Evelyn’s version of the 30 September 2004 meeting. However, in cross-examination, he conceded that RP did not expressly say that the shoe business was a Da Vinci business, and explained that that was the inference he drew from the fact that RP was the managing director of Da Vinci, and also through the conversation with RP.

  166. The People’s Park outlet

  167. [124] After the 30 September 2004 meeting, Evelyn and RP had several telephone discussions on the outlets’ location. Eventually, RP, Evelyn, Neo and Shavon viewed an outlet at #01-57 at People’s Park on 8 October 2004. The landlord was Tan Kok Thye Pte Ltd, whose managing director was Tan. Tan was present at the meeting, as was a property agent.

  168. [125] Evelyn said RP liked the location and suggested that she and Neo put in an offer as soon as possible. In cross-examination, Evelyn added she was excited by the crowd at People’s Park and went to walk around; she did not therefore participate in the negotiations but believed they were done by RP. Evelyn also said that the rent was negotiated to $7,000 a month, down from the $8,000 a month quoted by Tan when she first met him two days ago, on 6 October 2004. Neo and her then placed a deposit. Evelyn also said that she told Tan that Da Vinci was rolling out a franchise and she was doing the business.

  169. [126] Tan was subpoenaed by DNV to give evidence. He said that Evelyn had told him that they were starting up a shoe franchise with Da Vinci. He said she was interested in renting the unit but had to check with the franchisor if the unit was suitable. He said that, when he met Evelyn, Neo and RP, RP gave him two name cards – one described RP as the marketing director of DVH; another described RP as the managing director of Walking Culture. He said that the property agent introduced RP as being from Da Vinci. He confirmed that Evelyn did not participate in the negotiations. RP told him that RP was from Da Vinci and that his father was the owner of Da Vinci. RP told him that Da Vinci was branching out to shoes and Walking Culture was the new business. He said RP claimed the strong support of his father. He said RP told him about the Da Vinci Walking Culture store at Bugis, that it was doing very well and that it was able to afford the high rent there. He said he felt that RP was trying to impress him by telling him about Da Vinci. RP wanted to have the next Da Vinci Walking Culture outlet at the People’s Park unit. RP negotiated for a lower rent for the franchisee. Tan was keen to have Da Vinci franchisees as his tenants and agreed to reduce the rent for his unit. He said franchisees related to big companies tended to honour their agreements, and he was willing to lower his price to receive prompt payment. He rejected a suggestion to him that it was against common sense for RP to speak about the high rent he could afford to pay when negotiating. He explained that RP was trying to impress him that the business was viable provided the rental was right. He said that he signed a letter of intent with Evelyn and Neo after the negotiations and received a cheque on the spot.

  170. [127] RP’s version of events was rather different. He agreed that he gave two name cards to Tan, but clarified that he was actually the managing director and not the marketing director of DVH. He accepted that he told Tan that he was from Da Vinci and his father was the owner of Da Vinci. He said that this was in the context of Da Vinci possibly being interested in retail outlets as well. He denied telling Tan that Da Vinci was branching out to shoes or that Walking Culture was the new business or that he had the strong support of his father. He denied telling Tan about the Da Vinci Walking Culture store at Bugis because the name had already been changed to Walking Culture by then. He denied saying that he was interested in having the next Da Vinci Walking Culture outlet at People’s Park. He denied negotiating the rent with Tan or telling him that he could pay high rent at Bugis. He said that it did not make sense to claim this if he was trying to reduce the rent. He said he would not negotiate rent for franchisees. He said that he thought that the unit’s area (400 sq ft) was too small and the rent was too high. He said he told Evelyn and Neo about his reservations but Evelyn told him that they had already signed up with the landlord.

  171. [128] I cannot see any reason why Tan would lie. Further, while Tan was recollecting events occurring more than five years ago, it seems to me that as a landlord he should be quite clear in his mind why he gave a reduction in the rent he wanted.

  172. The Millenia Walk outlet

  173. [129] Soon after, on 10 October 2004, Evelyn received an email from a property agent Richard Quek who had been recommended by RP. That email forwarded an email dated 8 October 2004 from Soo Weiping, a senior leasing executive with Pontiac Marina Private Limited (“PMPL”), the landlord of Millenia Walk. Soo Weiping said that she understood from one Samantha, a director of PMPL, that ‘Da Vinci is keen to re-explore the possibility of having their “Walking Culture” concept in Millenia Walk’.

  174. [130] On 11 October 2004, Evelyn went with RP and Richard Quek to view a unit at Millenia Walk. They ended up looking at a larger unit there. RP helped to negotiate a lower rent for the unit. Evelyn said that had it not been for RP’s representations about Walking Culture’s association with Da Vinci, they would not have been able to rent the unit.

  175. [131] With regard to Weiping Soo’s email of 8 October 2004, RP said that he clarified this misunderstanding later. RP said that at a meeting with the property agent, Richard Quek, Samantha, Soo Weiping, Evelyn and Neo, he said that Walking Culture was not the business of Da Vinci as he did not want Da Vinci to be liable for the business. RP said that Samantha had initially wrongly connected Da Vinci with Walking Culture because RP had previously dealt with her regarding a location for a Da Vinci furniture store, and she therefore connected RP with Da Vinci.

  176. [132] RP did not call Richard Quek, Soo Weiping or Samantha to be his witness. He said that Richard Quek did not want to get involved and he could not contact Soo Weiping who had left PMPL. He spoke to Samantha, who vaguely remembered his version, but did not want to get involved in litigation. The alleged clarification by RP to Richard Quek, Samantha and Soo Weiping, in the presence of Evelyn and Neo, was also not raised with either Evelyn or Neo while they were being cross-examined.

  177. [133] In the circumstances, it is difficult to escape the conclusion that RP must have said or done something to give Samantha the impression that Walking Culture was a Da Vinci business, and that he did not, contrary to his allegation, clarify this wrong impression later on.

  178. Franchise Agreements

  179. [134] On 13 October 2004, Neo and Shavon incorporated DNV with a paid up capital of $200,000. On 19 October 2004, Evelyn, Neo and Shavon met RP and Peck Lin at Peck Lin’s office to discuss the franchise agreements. On or about 20 October 2004, DNV executed two franchise agreements with Tradewind, one for the store at PPC and the other for the store at Millenia Walk.

  180. [135] According to Evelyn, during the meeting on 19 October 2004, Neo asked RP why the franchise agreements were being signed under Tradewind’s name instead of Walking Culture or Da Vinci. She said RP replied that WCIPL was the company holding the brand and Tradewind was just the vehicle used for the franchise business. She was made to understand that the whole business was owned by Da Vinci. She said she asked RP what assurance or guarantee she and Neo would get from the franchisor, and in reply RP told them that Walking Culture had the full backing of Da Vinci. In cross-examination, she explained that the guarantee question came up because RP had earlier asked for payment by way of a bank draft. She added that RP had laughed and said that Da Vinci was so big and “What’s the worry?” She said felt assured by what RP was telling them.

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